Tesla's Market Cap Dips Below Eli Lilly Following Q4 Revenue Miss

Tesla Inc. TSLA has been surpassed in market value by pharmaceutical giant Eli Lilly LLY, following a 12% single-day plunge in Tesla’s stock.

What Happened: Tesla’s fourth-quarter earnings report, which fell short of revenue and profit expectations, triggered a significant drop in its stock price. The EV maker’s market cap dipped to $581 billion, while Eli Lilly’s climbed to $595 billion.

The earnings report, coupled with weak growth forecasts for the coming year, played a significant role in the stock’s decline. Tesla’s earnings call was also met with criticism, with one analyst labeling it a “train wreck.”

Meanwhile, Eli Lilly’s ascent began in 2023, driven by the success of its weight-loss drugs Mounjaro and Zepbound, which led to a 59% surge in its shares for the year. The company’s stock has appreciated 79% over the past 12 months.

Despite being a part of the “Magnificent 7” tech stocks that propelled the market rally last year, Tesla’s stock has plummeted 27% this month. The EV maker was also recently outpaced by Chinese EV manufacturer BYD in car sales, as reported by Business Insider.

Wells Fargo analyst Colin Langan reportedly dubbed Tesla’s earnings report as a “trifecta of bad news,” pointing to slowing sales growth, inability to further cut costs, and CEO Elon Musk’s controversial bid to own a 25% stake in the company.

Conversely, analysts are bullish about Eli Lilly’s future. Goldman Sachs forecasted last month that the company’s stock could skyrocket 140% by 2028 due to increasing demand for GLP-1 drugs. Billionaire investor Ken Langone also predicted that Eli Lilly could become the first trillion-dollar drug company in history, according to the report.

See Also: Elon Musk’s Tesla Confronts ‘Black Cloud’: Q4 Earnings Must Draw ‘Line In The Sand Around Margins,’ Analyst Says

Why It Matters: Tesla’s recent performance has raised concerns about its position in the “Magnificent Seven” list of mega-cap stocks.

CNBC's "Mad Money" host Jim Cramer had recently hinted at Tesla being replaced by Eli Lilly in the Magnificent Seven, suggesting that Tesla might be on a "growth pause" compared to its Big Tech counterparts. Later, Cramer confirmed his stance by suggesting Tesla’s removal from the list due to its recent underperformance.

On the other hand, Eli Lilly’s stock continues to surge, largely due to the upside potential of its GLP-1 drug Mounjaro.

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