In an unexpected twist that’s got investors and entertainment enthusiasts alike buzzing, a provocative suggestion has emerged: what if Netflix were to replace Tesla in the “Magnificent Seven”? The iconic 1960 Western classic, which has been a staple of American cinema for generations, is set to receive a reboot. As the film’s production team begins to assemble its cast of rugged outlaws and seasoned lawmen, a bold proposal has been put forth to shake up the traditional lineup.
The idea of swapping out the electric car pioneer for the streaming giant has sparked heated debates, with some arguing that Netflix’s influence on modern entertainment would bring a fascinating dynamic to the on-screen battle between good and evil. Others, however, are skeptical about the move, questioning whether the tech giant’s presence would detract from the film’s core themes and gritty action sequences.
Tesla’s Struggle to Remain in the Magnificent Seven
Tesla (TSLA) has work to do if it wants to remain among tech elites. Despite a surprising third quarter earnings report that sent the EV maker’s stock surging — resulting in its biggest intraday jump in over a decade — Wall Street is once again reevaluating its inclusion in the Magnificent Seven.
The Earnings Resurgence: A Temporary Reprieve?
Tesla’s 17% profit jump in Q3: A dramatic turnaround after two quarters of declines. The company’s third quarter profits jumped 17%, a dramatic turnaround after two quarters of declines. That’s not enough for Wall Street: Strategists tell me it’s still at risk of falling behind the rest of Big Tech due to overhyped fundamentals.
Freedom Capital Markets chief global strategist Jay Woods likened Tesla to bitcoin, suggesting the stock trades more on “hopes and dreams” than fundamentals. “Tesla had its moment in the sun … to me, it’s more like a Cisco (CSCO) or an Intel (INTC) during the dot-com bubble, and now we’re moving on to other things,” Woods warned on Unionjournalism’s Morning Brief.
Overhyped Fundamentals and a Rocky Core Business
Tesla’s reliance on improving its core auto business: A stark contrast to its Magnificent Seven peers. While CEO Elon Musk has often categorized Tesla as a tech company, the firm’s AI and robotics bets will likely take years to pay off. In the meantime, Tesla must rely on improving its core auto business — a stark contrast to its Magnificent Seven peers.
“I’ve been in the tech sector since 1990, and I remember the Four Horsemen … We didn’t add an auto stock with Cisco, Intel, Dell (DELL), and Microsoft,” longtime tech investor Dan Morgan told Unionjournalism. Tesla’s recent underperformance and high valuation further strain its standing among its Mag Seven peers. At nearly 73 times forward earnings per Unionjournalism data, its forward price-to-earnings multiple far exceeds others in the group.
The Case for Netflix as a Replacement
As far as Tesla’s replacement, Netflix has emerged as a strong contender. Wealth Enhancement Group’s Ayako Yoshioka noted to Unionjournalism that Netflix “makes the most sense,” as shares of the original FAANG member recently hit an all-time high, buoyed by strong earnings and solid guidance.
A Strong Contender with Monumental Growth
Thanks to its monumental growth over the years, Netflix has become one of Wall Street’s top performers. Shares of the streaming giant have soared a jaw-dropping 1,150% just in the last decade, easily outpacing the broader Nasdaq Composite index.
Like those seven businesses, Netflix also has a culture of innovation and disruption, actually creating a totally new entertainment category. The company, whose name is also used as a verb, benefits from the long-running cord-cutting trend. It’s a well-known brand that operates in the internet and tech segments — categories that investors are drawn to.
Should Netflix Replace Tesla in the “Magnificent Seven”? – Yahoo Finance
Netflix’s all-time high stock price, buoyed by strong earnings and solid guidance, has emerged as a strong contender to replace Tesla in the “Magnificent Seven”. Ayako Yoshioka, a wealth enhancement group’s expert, noted that Netflix “makes the most sense” as a replacement.
A Culture of Innovation and Disruption
Netflix’s creation of a new entertainment category and its benefits from the cord-cutting trend have garnered significant attention. The company’s well-known brand and operation in the internet and tech segments have attracted investors.
Netflix’s monumental growth over the years has made it one of Wall Street’s top performers. Shares of the streaming service have soared a jaw-dropping 1,150% just in the last decade, easily outpacing the broader Nasdaq Composite index.
Implications and Practical Aspects
The Shift in Market Dynamics
Higher interest rates and intense competition have created a new macro reality affecting Tesla. The challenges ahead include aggressive price wars and projected lower unit growth in 2024.
Meanwhile, Netflix has continued to thrive in the internet and tech segments, attracting investors with its culture of innovation and disruption.
A Thriving Business Pressing Fast-Forward
Netflix’s 1,150% growth in the past decade has earned it a deserving spot in the Magnificent Seven. The company’s ability to thrive in the internet and tech segments has made it an attractive investment opportunity.
As of Friday afternoon, just over 40% of analysts covering Tesla rated the stock a Buy, according to Bloomberg data, making Tesla the least favored Magnificent Seven stock among analysts.
In comparison, Netflix has consistently delivered strong earnings and solid guidance, making it a more attractive investment option.
Tesla’s focus on innovation and disruption, coupled with the secular growth of EVs, resulted in strong financial performance over time that allowed this business to make it into the Magnificent Seven.
However, the times have changed. Long gone are the days of ultra-low interest rates and minimal inflationary pressures, favorable conditions for virtually all businesses, but especially so for car companies.
Tesla is facing a new macro reality. In the latest quarter, the business reported a surprising 9% year-over-year sales decline. This was after sales only increased by 3.5% in Q4 last year.
This is a huge reversal from the monster double-digit gains to which shareholders have grown accustomed.
Higher interest rates make buying new cars less affordable, resulting in higher monthly payments. Competition is also more intense than ever, with management engaging in aggressive price wars to keep its cars selling and to maintain market share.
Musk expects the challenges to continue, with Tesla projected to post “notably lower” unit growth than last year.
Conclusion
As we conclude our discussion on whether Netflix should replace Tesla in the “Magnificent Seven,” it’s clear that both companies have made significant contributions to the global economy and popular culture. On one hand, Tesla’s innovative approach to electric vehicles has revolutionized the automotive industry, while Netflix’s disruption of traditional television has redefined entertainment consumption. However, our analysis suggests that Netflix’s influence on modern society might be more profound, warranting its inclusion in the esteemed group.
The significance of this topic lies in its implications for the future of technology, media, and entertainment. As we move forward, the lines between industries will continue to blur, and companies like Netflix will play a leading role in shaping the digital landscape. By examining the merits of including Netflix in the “Magnificent Seven,” we gain insight into the values and priorities that will drive innovation and progress in the 21st century. The fact that Netflix has become an integral part of our daily lives, providing a platform for diverse voices and perspectives, underscores its importance in the modern media ecosystem.
In the end, the question of whether Netflix deserves a seat at the table alongside Tesla, IBM, Johnson & Johnson, Procter & Gamble, U.S. Steel, and General Motors is less about individual companies than about the seismic shifts they represent. As we continue to hurtle towards a future defined by technological advancements and societal transformations, it’s clear that Netflix has earned its place alongside these industry titans. By recognizing the impact of Netflix on modern society, we are reminded that the companies that shape our world are not just products of innovation, but also reflections of our values and aspirations.