Baird calls Tesla's S&P 500 snub 'surprising' as shares tank

Elon Musk, co-founder and chief executive officer of Tesla Motors.
Yuriko Nakao | Bloomberg | Getty Images

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Tesla shares dropped 21% on Tuesday, the first trading day after the S&P 500 snubbed the stock from inclusion in its benchmark index, a decision that research firm Baird called "surprising."

"Unclear why TSLA was not included in the recent rebalancing cycle, though we do think the stock will eventually be added to the S&P 500, having fulfilled all inclusion criteria," Baird's Ben Kallo said in a note to clients Tuesday.