Tesla's market value evaporated by $80 billion on Thursday, surpassing American pharmaceutical giant Eli Lilly&Co.
Previously, Tesla CEO Elon Musk warned that despite sacrificing profit margins to attract consumers, sales growth this year may slow down, which has raised concerns among investors about weak demand for Tesla cars and the company facing more intense competition.
Musk said on Wednesday that due to Tesla's focus on developing the next generation of low-cost electric vehicles, the sales growth rate in 2024 may be significantly lower than in 2023.
Tesla's Q4 financial report released on the same day fell short of market expectations. According to this financial report, Tesla's fourth quarter revenue was $25.17 billion, a 3% increase from $24.3 billion in the same period last year, but lower than analyst expectations of $25.87 billion; The adjusted earnings per share (EPS) is $0.71, and analysts expect it to be $0.73.
Affected by this, Tesla's stock price experienced its largest intraday decline in over a year on Thursday. As of the close, the stock price plummeted by more than 12%, and its market value evaporated by about $80 billion, dropping to $580.6 billion. This resulted in Tesla's market value loss of approximately $210 billion this month.
It is worth noting that Tesla is the only stock among the seven tech giants in the US stock market to have fallen so far in 2024.
According to data and analysis company Ortex, Tesla's short positions have earned $3.45 billion so far this year, making it the most profitable short selling transaction in the United States.
Goldman Sachs analyst Mark Delaney said that slowing car delivery and profit growth will become a major threat to Tesla's stock price.
Michael Hewson, chief market analyst of CMC Markets, said: "The problem faced by Tesla is that from now on, any major attempt to boost sales may be at the cost of further decline in operating profit margin, because it must compete with BYD in China, and competition in other places is also intensifying."
Some analysts suggest that if Tesla's sales growth and profit margins weaken further, valuation may become difficult to justify. Bernstein analyst Toni Sacconaghi said that Tesla is becoming more and more like a traditional automotive company.
Weight loss pills have become a new trend
On Thursday, Lilly's stock price fell 0.96%, with a market value of $595.8 billion, surpassing Tesla's in one fell swoop.
Lilly has become the latest company to surpass Tesla's market value, indicating a shift in investor preferences. Weight loss drug innovation companies have replaced electric vehicle manufacturers as one of the mandatory stocks for 2024.
Thanks to Mounjaro, a diabetes treatment drug, and Zepbound, a weight loss drug, Lilly's share price has soared by 80% in the past year, becoming the world's largest healthcare company by market value. And its competitor, Novo Nordisk, has become the most valuable listed company in Europe with another weight loss drug.
Steve Sosnick, Chief Strategist at Yingtou Securities, said, "The market tends to favor big trends, of course, electric cars and everything related to Tesla were once one of the trends. Currently, the real trends that attract investors are artificial intelligence and GLP1 weight loss pills."
Tesla used to be the fifth largest company in the S&P 500 index, but now it has given way to Lilly and ranks ninth. If its decline is difficult to stop, then the position of the top ten US stocks will not be guaranteed in the future.