The Magnificent Seven are already starting to fall apart in the S&P 500. And it's not pretty for investors.
Shares of Tesla, one of the original Magnificent Seven stocks that drove the S&P 500 in 2023, is now a disaster. The stock's 26.3% drop this year erased $208 billion in market value. That makes this formerly hot stock the biggest destroyer of wealth this year, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
This is a radical shift for investors to mentally grasp. It means Tesla has erased more wealth than even the perennially struggling Boeing. Boeing, in the midst of serious questions about its manufacturing quality, is down 21.6% this year. But that stock drop only wiped away $34 billion in market value.
"Tesla is going through 'one of these moments' with ... a dark day for the bulls (and us) with the door left open for more price cuts and a lack of guidance for 2024 putting massive pressure on shares," said Dan Ives, analyst at Wedbush.
Tesla's Results Aren't Magnificent Either
Tesla isn't just a disaster in terms of lost stock value. It's detracting from the S&P 500's profit growth in the fourth quarter of 2023, too.
"The only company in the 'Magnificent 7' that is not a positive contributor to year-over-year earnings growth for the S&P 500 for Q4 2023 is Tesla. On Jan. 24, the company reported a year-over-year decline in non-GAAP EPS of 40% for the fourth quarter ($0.71 vs. $1.19)," said John Butters of FactSet.
That makes Tesla an outlier — in a bad way. Nvidia, Amazon.com, Meta Platforms, Alphabet, Microsoft and Apple as a group are seen reporting year-over-year earnings growth of 53.7% for the fourth quarter, Butters says. Without these six companies, the earnings decline for the remaining 494 companies in the S&P 500 would be -10.5% for the fourth quarter 2023. "Overall, the blended earnings decline for the entire S&P 500 for Q4 2023 is -1.4%," Butters says.
It won't be long now to see how these six contributors will do. All are slated to report their fourth-quarter results on Jan. 30 or Feb. 1.
The Future Of Tesla In The S&P 500
Things don't look good for Tesla at the moment. But the company's future can pivot fast.
Right now, analysts call the stock a "hold." All's not lost, though. Analysts are still somewhat bullish on Tesla's future.
Their average 12-month price target on the stock is 220.61 a share, or nearly 21% higher than it is now. Additionally, the company is seen making $3.26 a share this year. That's up 4.5% from 2023. And Tesla's profit is expected to soar another 39.3% in 2025.
But for now, Tesla investors will have to settle for a stock that's far from magnificent.
Biggest Market Value Losers This Year So Far
Tesla is the worst, but Apple isn't looking good either
| Company | Ticker | Year-to-date ch. | Market value ch. ($ billions) |
|---|---|---|---|
| Tesla | -26.4% | -$208.4 | |
| Boeing | -21.5% | -$33.9 | |
| Intel | -13.2% | -$27.5 | |
| UnitedHealth Group | -4.5% | -$21.7 | |
| Apple | -0.2% | -$22.0 | |
| Humana | -21.2% | -$12.0 | |
| Archer-Daniels-Midland | -27.7% | -$10.7 | |
| Nike | -5.4% | -$9.7 | |
| Morgan Stanley | -5.5% | -$9.7 | |
| Lockheed Martin | -5.4% | -$8.8 |
