Tesla, who is owned by entrepreneur Elon Musk, lost $82 billion in value in just one day. This shocking news came just after share prices fell by around 21 percent.
The S&P 500, who is one of the world's biggest stock indexes, refused to list Tesla on its list of companies.
Stock indexes require companies to pass benchmarks for profitability and market value before they can be included in the index. Seeing that Tesla far surpasses the threshold in terms of value, and having been named the most valuable carmaker in the world this year, the company was conspicuous by its absence on the index.
However, experts say its profit reports are still relatively new – the company was founded in 2003, but has only recently begun posting consistent profits – and that this may be why the firm is still not included in the S&P.
Tesla's stocks were valued at around $500 each at the end of August, and has now dropped to $330.21. However, the total value of all of its shares is over $307 billion.
The auto manufacturer's stocks skyrocket in price by around 300 percent, to the point that it got so high that Tesla last month announced a five-way stock split by cutting prices by 80 percent.
Tesla said its Board of Directors had "approved and declared a five-for-one split of Tesla's common stock in the form of a stock dividend to make stock ownership more accessible to employees and investors."
Tesla is not the only firm to undergo a sharp fall in price in recent days, as reports of a huge tech industry sell-off have hit headlines in recent days, including the Nasdaq> The stock market index that tracks more than 3,300 companies has also fallen by ten percent.
Apple's value dropped by 12.6 percent, Microsoft dropped by 10.1 percent, and gaming giant EA also dropped by 10.9 percent.
The Guardian claims that the huge drop is due to investors simply selling for profit after a general price increase, but it is still unclear what caused the major drop in shares over the past few days.