Elon Musk lost his position as the world's richest man to Bernard Arnault, the French mogul who runs LVMH after Tesla suffered a $200 billion market value fall in January.
Forbes puts the tech tycoon's net worth at $205 billion, down from $320 billion in November 2021. LVMH, on the other hand, is celebrating strong Q4 sales that baffled the industry. Forbes values CEO Bernard Arnault at $208 billion following Friday's 12% share price rise.
Tesla's losses began in Q4 when BYD overtook it as the top electric vehicle (EV) maker. Tesla's stock price fell 26% due to major European vehicle market issues and EV reliability worries in cold US weather. Complicating matters, Elon Musk pressed fellow directors for an expansive pay package, threatening to pursue his AI and robotics initiatives elsewhere. Tesla's Q4 earnings announcement added to the turmoil, refraining from clear guidance beyond a vague warning of "notably lower" vehicle sales growth in 2024.
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Tesla's Weakening Profitability
Despite a record $97 billion in sales in 2023, Tesla saw declining profitability and free cash flow. After Tesla's $5.9 billion fourth-quarter accounting gain, investors are scrutinizing the annual 10-K filing for warning flags. Elon Musk's descent from the pinnacle of wealth underscores the challenges facing Tesla amid intensifying competition and internal issues.
Tesla shares experienced a 12% plunge on Thursday following Musk's cautionary statements about an impending decrease in sales growth. Despite prior price cuts impacting margins, Elon Musk announced a strategic shift to produce more affordable next-gen electric vehicles at Tesla's Texas factory by 2025, per WION. However, this move, aiming to boost production, presents challenges due to advanced technology integration.
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Analysts from TD Cowen noted a negative turn in Tesla's recent headlines, highlighting that Q4 revenue and profit fell below expectations. Experts, including Michael Hewson from CMC Markets, express concerns that sales-boosting efforts may further erode operating margins, particularly amidst fierce competition in China with companies like BYD and escalating global competition.
Tech Giants Beat Expectations
While Tesla faces challenges, the other members of the "Magnificent Seven" (Nvidia, Microsoft, Meta Platforms, Amazon, Apple, and Alphabet) saw record-breaking performances last week, as reported by CNN.
On February 21, Nvidia will release its financial results after Tuesday's earnings from Microsoft and Alphabet and Thursday's from Apple, Meta Platforms, and Amazon. Excluding Tesla, the Magnificent Seven anticipates a robust 53.7% Q4 earnings growth compared to a projected 10.5% decline for S&P 500 companies, excluding these influential firms.
Even without the Federal Reserve's interest rate reduction, investors believe the Magnificent Seven may remain influential due to Wall Street's preference for protective investments. Investors sought refuge in large tech equities last year, assuming their strong balance sheets and engagement in artificial intelligence would protect them from the regional banking crisis.
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