You may have recently seen some articles titled something like “Tesla’s place in the ‘Magnificent Seven’ is at risk.” Here’s a sample from one such article in Business Insider written by George Glover:
Tesla’s 2024 is off to a rough start, as Wall Street ponders whether Elon Musk’s EV maker deserves its place among the so-called “Magnificent Seven” group of mega-cap tech stocks.
Shares of the company have tumbled nearly 12% over the first two-and-a-half weeks of the year in a skid that’s wiped out $91 billion in market capitalization, according to data from Refinitiv.
That plunge means Tesla now trades at a valuation of under $700 billion – way below the rest of its peers.
Apple, Microsoft, Google owner Alphabet, Amazon, and Nvidia are all worth more than $1 trillion, while Facebook parent Meta Platforms was valued at $940 billion as of Tuesday’s closing bell.
So despite beating earnings estimates, analysts want to kick Tesla out of the “Magnificent 7.” This sounds like the plot of a comic book.
But those investing in the Magnificent 7, or any stock for that matter, should consider what it means that the market reversed its judgment on Tesla to the tune of $91 billion in just two and half weeks. That’s roughly the GDP of Bulgaria. How’d they get it so wrong? Could the market be just as wrong on the other six “Magnificent” companies?
Action Line: Some of the seven may indeed be “Magnificent.” But why take a chance on a stock having superpowers? Instead, build a diversified portfolio of individual securities that generate income for your retirement. When you need help, I’m here.
