Tesla ousted from the Olympus of the 'magnificent 7'. Eli Lilly now takes the throne
The drop of more than 50% since 2021 pushes Musk's group out of the stock market elite dominated by Microsoft, Apple, Amazon, Nvidia, Google and Meta
3' min read
3' min read
In November 2021, a Tesla share cost $413. On 25 January 2024 that same share traded at 183. In the face of such a drop of more than 50 per cent, is it still fair to consider Elon Musk's automotive stock in the Olympus of the 'magnificent 7'? Along with Microsoft, Apple, Amazon, Nvidia, Google and Meta? This is the question of the day in the traders' halls, especially in view of the fact that Tesla is currently worth, despite the sharp drop in the stock market, 44 times earnings and as much as 6 times revenues.
These are not the multiples of a common car company, but they are those of one of the 'magnificent' ones, the ones that have accustomed the market to exponential growth rates and thus manage to sell the dream to investors of deserving above-average prices.
China's attack
.But now that Musk has questioned the sustainability of the 'old' growth rates, emphasising the importance of imposing tariffs on China to face competition in the electric car sector, selling that dream to the market may be increasingly difficult.
While the market is wondering about this (the 25 January quarterly report is still to be digested) there is one objective fact: Tesla, technically, no longer belongs to the list of the 'magnificent 7'. With the -12% loss suffered after the presentation of the accounts in terms of capitalisation, it has been replaced by Eli Lilly, a pharmaceutical giant that also continues to rise due to its sales of anti-obesity drugs.
In and out of the elite
.The exit from the elites of the 'magnificent 7' is not only simoblica. But it is also likely to have an effect on the distortions associated with the asset management and ETF industry.
