 Hey guys, Eddie here with another video. Today, we're going to be discussing Tesla and their shares are down as much as 20% today on Tuesday Erasing up to 80 billion in market capitalization from the world's most valuable automaker So they're down over 26% over the last week, but let's not forget how much they've increased over the last year alone So over the last year, they're up a very cool 675% year to date up around 320% the last three months up 85% So they've had a real wild ride. They've had increasing attention on them from the retail traders as we know But more and more institutions are really warming up the idea of Tesla And actually what's really increased the valuation of Tesla is really not looking at it as an automaker in the traditional sense So looking at it against comparables like GM, Ford, actually that valuation would generally be a lot lower if you're looking at traditional metrics like deliveries But really what Tesla is or what is being viewed as and perceived as is really a technology name And really is almost a software company with autonomous vehicles You know all the software they've got in their model S, 3s, X and Ys And actually the autonomous taxis, the electric vehicle market as a whole and how much share they can take from that And actually that leads to a much higher multiple or a much higher valuation So sales side analysts are scrambling to increase their targets or at least they have been And actually if it's being viewed as really the pioneer in the electric vehicle space not to mention things like batteries This is why it's commanding such a big valuation at pretty much a thousand times earnings So they've had a really wild ride this year up a huge amount but actually today they're down up to 20% And why is this the case? One of the major reasons they've been snubbed by my old company, the S&P So standard and poor, so the S&P 500 has actually passed up on including Tesla And it's the most influential index, the S&P 500 So the S&P 500 is the world, sorry, the world, America's largest 500 companies And probably in the world as well but only in America Tesla's market cap is far higher than most others actually included in the index But it's actually been snubbed in favor of names like Etsy So Etsy is actually 25 times smaller than Tesla on a market cap basis Why is this snubbed by the S&P 500 inclusion hurting their stock price so much? Basically lots of pension funds and passive funds own the S&P 500 so popular ETFs like SPI as an example And their job is really to mirror the S&P 500 index So when a new company is added to that index then they need to actually buy shares in the company to mirror the composition Okay, so this would put obviously upward price pressure on Tesla shares Obviously being a positive for them So the fact that markets over the recent weeks have been pricing this inclusion in September And now this is not materializing and it may be December or if at all this year This is obviously going to be a real negative for the stock As it would have seen a lot more institutional flow if it was included in that S&P 500 index Another factor that really could be weighing on Tesla shares is the massive 5 billion stock offering they issued With the help of some major leading investment banks last week according to a new regulatory filing So this share offering usually is dilutive for a company So infecting popular metrics like earnings per share The denominator of this being the shares outstanding increases so that earnings per share looks less favorable So this kind of dilutive action generally would be seen as a negative Unless investors perceive them to be doing a really sensible thing Once their share price has risen so much Actually doing an equity offering is a really really good idea to capitalize on that share price And actually raise some capital for future investment to the business But this paired with the snub by the S&P 500 index Plus we saw real negative tech pressure on Thursday and Friday And again today we're seeing Apple down quite a lot If you haven't checked out the video I did yesterday regarding the unusual option buying and selling activity of Softbank Go and check it out it will be on the Amplify YouTube channel But this could be further exacerbated by dealers being short gamma and delta And actually exacerbating the price movement downwards actually selling more as they're long So lots of things weighing on Tesla today But we'll definitely see if there's any support mainly at the 336 level or 300 if it does get down there So that is why Tesla shares are most likely falling today So if you enjoyed the video give it a like, give the channel a subscribe And if you like these kind of ad hoc market reviews definitely let me know in the comments and I'll be happy to record more Take care