Should Tesla have been accepted into the S&P 500?
The latest decision still remains questionable, although there are good reasons why it did not happen yet.
Frank M. StockerOctober 5, 2026
The S&P 500 is an exclusive club of the 500 largest companies by market cap on the NYSE or Nasdaq, and the addition of three new companies to replace the three departing companies on Friday was a big deal - especially with EV darling Tesla (NASDAQ: TSLA) wasn't among those selected to join. Since Tesla got the cold shoulder of the S&P 500, Tesla's record is very bad. Its devastating stock has fallen from $ 502.8 on September 1 to $ 354.67 at the time this article was written on September 8th. This is a major setback to a snub that no one expected from the S&P 500 club. The club booted H&R Block (HRB), Kohl's (KSS) and Coty (COTY) and replaced them with Etsy (ETSY), Teradyne (TER) and Catalent (CTLT). Investors will be forgiven for their confusion. They will also be forgiven for never hearing from Teradyne, an industrial automation and robotics company, and Catalent, a pharmaceutical developer. And the surprise that a craft marketplace like ETSY was added to the club via the Tesla giant is also easy to understand. There will be none for anyone who waits for an explanation. The S&P 500 is not self-explanatory. However, the club must decide whether to follow the market sentiment or to beware of the hype when accepting new members. What the S&P 500 was wary of was the fact that Tesla shares have more than quadrupled this year, overtaking the majority of the companies already in the club, and not necessarily because of fundamentals, but due to the future hype. This stock price surge was also the result of a new generation of retail investors who am amassing stocks via zero free trade applications like Robinhood. And these new investors are distorting what traditional Wall Street sees as reality. Meanwhile, investors were actually fickle with the hype, selling Tesla the minute the S&P 500 snubbed him. That alone proves the correctness of the S&P 500. So, yes, Tesla is one of the largest companies in the US and is still staying out of the index, much to the dismay of investors. It is the most valuable auto company in the world. Toyota, the second most valuable company, is only worth about $ 215 billion. But the index fears extreme hype effects. Instead, we have crafting. But NASDAQ: ETSY's inclusion in the Top 500 club, on the other hand, did nothing to its share price at the time of this writing: Few would have predicted that. It's an all-round big coup to have a handicrafts marketplace where individual artisans sell things like handmade slime, custom furniture, soap, candles - to name a few - and become a $ 13 billion monster that sucks in S&P 500 lands. But while many will complain about Tesla's lack of involvement, ETSY is also an indication of a big trend: the wildly exploding retail economy that sums up American entrepreneurship. These are no longer your grandmother's lace doilies. The pandemic will also help as the transition to e-commerce will be aided by the closings of retail stores that were already in full swing before the closure. Online spending rose more than 30% in the first half of this year alone, according to Digital Commerce 360, and is still on an upward trend despite the partial lifting of pandemic restrictions.
