• Tesla's exclusion from the S&P 500 index on Friday was a "brave" decision by the index committee, DataTrek said in a note on Wednesday.
• The note said that the exclusion of the mega-cap electric-vehicle manufacturer surprised DataTrek's cofounder Nicholas Colas and that the committee's decision could have come only from a collective view that Tesla is "profoundly overvalued."
• Relative to its peak market cap of $465 billion, Tesla "sits on shakier fundamentals," likely contributing to the committee's decision to exclude Tesla, the note said.
• Tesla traded at a trailing 12-month price-earnings multiple of 913x on Wednesday, according to data from YCharts.com.

Tesla on Tuesday fell 21% from Friday's close as investors digested the S&P 500 exclusion amid a tech-heavy market sell-off.

But the S&P Dow Jones Indices index committee's decision to exclude Tesla despite its eligibility for inclusion was a "brave" one, DataTrek cofounder Nicholas Colas said in a note on Wednesday.

The decision by the committee could "only have come from a collective and committed view that Tesla is profoundly overvalued," Colas said.

Tesla traded at a trailing 12-month price-earnings multiple of 913x on Wednesday, according to data from YCharts.com. The S&P 500 traded at a trailing 12-month price-earnings multiple of 21.7x, according to JPMorgan.

In addition to a steep valuation, the committee likely thinks Tesla "sits on shakier fundamentals" than its August 31 market capitalization of $465.2 billion may indicate, DataTrek said.

That might refer to the fact that much of the profit Tesla has recorded over the past few quarters derives from the sale of green EV regulatory credits to other carmakers that don't meet the mandated annual EV production quota, and not from Tesla's main business of building and selling cars and solar panels.

Tesla will remain eligible for inclusion in the S&P 500 index if it continues to stay profitable in future quarters.

Instead of Tesla, the committee added Etsy, Teradyne, and Catalent to the S&P 500 index.