2024-01-26 22:23:19
After electric vehicle giant Tesla warned in its latest quarterly financial report that sales growth would drop significantly this year, its stock price plummeted 12%, the largest single-day drop in more than a year, and its market value plummeted by US$80 billion in one day. , and its market value was surpassed by the pharmaceutical company Eli Lilly.
Bloomberg News reported that Tesla was once the fifth-largest company in the S&P 500 Index. Now it has not only given way to Eli Lilly and Broadcom, but it is also difficult to maintain its position in the top ten. Tesla’s stock price plummeted on the 25th. CEO Musk’s personal worth evaporated by US$18 billion in one day. The company’s market value dropped sharply to US$581 billion, while Eli Lilly’s market value was approximately US$596 billion.
Bloomberg News compared the miserable Tesla with the glorious Eli Lilly. Bloomberg said that among some stocks that investors should own this year, electric car manufacturers have been replaced by companies that develop weight loss drugs. Eli Lilly is one of the latest companies to overtake Tesla, a sign of investors’ changing appetite for anything related to weight loss.
Eli Lilly’s stock price has soared because it has developed two weight-loss drugs, Mounjaro and Zepbound, and is expected to become the world’s largest healthcare company. Novo Nordisk, a Danish pharmaceutical company that also developed weight-loss drugs, once overtook LVMH, the boutique leader, and became the most valuable company in Europe.
“The market tends to favor some big trends, and of course one of those trends used to be electric cars and everything regarding Tesla,” said Sosnick, chief strategist at Interactive Brokers. “Now, the trend that really captures investors is artificial intelligence. Intelligence (AI) and weight loss drugs.”
Eli Lilly’s rise is mainly due to the above two new drugs that can control diabetes and reduce weight. The pharmaceutical company is also conducting trials for the treatment of Alzheimer’s disease. Eli Lilly’s stock price has soared 59% last year, and it has continued to rise this year, rising another 7.7% so far. With promising new drug sales, the market expects Eli Lilly’s stock price to go even higher.
In contrast, Tesla’s stock price has fallen by more than a quarter this year, and the prospects for electric vehicles are not as optimistic as those for pharmaceuticals. Even South Korean battery manufacturer LG New Energy believes that the global electric vehicle market will slow down this year. The company announced its financial report on the 26th. Operating profit for the last quarter was 338 billion won (US$252 million), an increase of 43% from a year ago and better than market expectations. However, the net profit for the last quarter fell from the previous quarter due to weak demand for electric vehicles in Europe. More than 50%.
Hewson, chief market analyst at CMC Markets, believes that Tesla’s problem is that “if you want to significantly stimulate sales from now on, you may have to pay the price of further decline in operating profit margin. Because it must compete with BYD in China, and other markets Competition is also increasing”.
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