Tesla Among Magnificent Seven as Valuations Drop Below 25x, Terafab Convergence Advances
Correlation between the Magnificent Seven and the equal-weighted S&P 500 turned negative on Feb. 23 as group valuations dropped below 25 times estimated earnings from nearly 33 times in October, impacting Tesla’s performance within the index. Tesla’s Terafab facility is set to merge Tesla and SpaceX processes, aiming to streamline EV manufacturing.
1. Negative Correlation and Valuation Reset
On Feb. 23, the correlation between the Magnificent Seven group—which includes Tesla—and the equal-weighted S&P 500 turned negative, marking the first divergence in three years. Group valuations have fallen below 25 times estimated earnings, down from nearly 33 times in October, a reset that could influence institutional flows and Tesla’s index weighting.
2. Terafab Integration with SpaceX
Tesla’s newly unveiled Terafab facility is designed to bring Tesla and SpaceX manufacturing closer, leveraging shared engineering and supply chains. By merging production processes, Tesla aims to reduce costs and accelerate EV output through advanced fabrication techniques developed alongside SpaceX.