Tesla Falls Out of Top 10 Most Valuable Companies!

Somebody check on Elon Musk because Tesla just dropped out of the top 10 most valuable companies.

Electric vehicle company, Tesla just lost its spot among the top 10 most valuable companies on the S&P 500.

The S&P 500 is the index that tracks the stock performance of the 500 largest companies listed in the US, so of course, being in the top 10 is a massive accomplishment. 

As I record this on March 11, the index is led by Microsoft and Apple, which have market caps at or near US$3 trillion. Market capitalisation refers to the total value of all the company’s shares.  Remember we recently talked about how chip manufacturer NVIDIA got up there as one of the most valuable companies too. 

So back to Tesla. The company slipped out of the top 10 recently after a dip in their stock price. Tesla stock lost 11% during the week of March 4th to the 8th, and is down almost 30% since the start of the year.  Yikes!

So what caused the slide? Well, as with most things on the stock market, it’s a combination of things. But for Tesla, two major points stand out.

For starters, the entire EV market is struggling right now. You have big auto manufacturers like Ford and GM scaling back on their EV fleets because consumers are just not feeling them like that any more. 

The research shows that consumers are hesitant to make the switch from traditional vehicles to EV because one, they’re more expensive and two, they have concerns about charging stations.

We did a video on this last week, so you can check that out for more info. 

And with Tesla’s entire business model being electric vehicles, this shaky demand is most definitely going to have an effect. 

But the real kicker is that last week, a Morgan Stanley analyst named Adam Jonas changed his outlook on Tesla. 

See Jonas is a well-respected Wall Street analyst.  He’s referred to as a longtime ‘Tesla bull’. This means he’s always believed and betted on Telsa’s stock price rising. But last week, he lowered his stock price projection from US$345 to US$320. He also said that there’s a possibility that Tesla will actually lose money this year, because of the EV slowdown etc. 

So that kinda got everybody looking around like… if this guy of all people, is changing his outlook on Tesla then something is really down.  

So the slide in early March pushed down Tesla’s market cap to about US$564 billion, knocking it out of the top 10 most valuable stocks on the S&P 500. 

But it’s not all on Jonas.  Like I said, it’s a combination of things. Because in addition to what I mentioned before, it looks like Tesla’s newly launched Cyber Trucks might be a flop. 

Some customers have complained about rusting and other issues. Plus the trucks are kinda of an eye sore, to be honest. So those sales probably won’t be what the company hoped for.

Also, Tesla’s stock took a hit after Elon Musk bought Twitter and that whole debacle. Like I said, it’s a lot.

Now Tesla does do some work in the artificial intelligence space so that could help the company boost its performance, but Jonas said he thinks Tesla will need to fix the auto side of the business first before they see any real impact from the AI side.

And that’s the bottom line.