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In November 2021, a Tesla share cost $413. On January 25, 2024 that same share was trading at 183. Faced with such a decline, more than 50%, is it still right to consider Elon Musk’s automotive stock in the Olympus of the “magnificent 7”? Together with Microsoft, Apple, Amazon, Nvidia, Google and Meta? It is the question of the day in the traders’ rooms, especially considering the fact that at the moment Tesla is worth, despite the sharp drop in the stock market, 44 times its profits and 6 times its revenues.
They are not the multiples of a common car company, but they are those of one of the “magnificent” ones, those that have accustomed the market to exponential growth rates and are therefore able to sell the dream to investors of deserving prices that are outside the average.
China’s attack
But now that Musk has questioned the sustainability of the “old” growth rates, underlining the importance of imposing tariffs on China to face competition in the electric car sector, selling that dream to the market could be increasingly difficult.
While the market is wondering about this (the January 25 quarterly report still needs to be digested) there is one objective fact: Tesla, technically, no longer belongs to the list of the “magnificent 7”. With -12% after the presentation of the accounts in terms of capitalisation, it was replaced by Eli Lilly, a pharmaceutical giant which is continuously rising also due to sales linked to anti-obesity drugs.
Enter and exit the elite
Tesla recalls more than 2 million vehicles
The exit from the elite of the “magnificent 7” is not only symbolic. But it also risks having an effect due to distortions linked to the asset management and ETF industry.