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On Monday, Warren Buffett's Berkshire Hathaway (NYSE:BRK, BRK.B)) pulled ahead of Elon Musk's Tesla (NASDAQ:TSLA) in market value, showing just how much earnings matter in the stock market.
According to Forbes, Berkshire's stock climbed 4.1%, pushing its market cap to about $1.08 trillion, while Tesla's shares slipped 2.2%, bringing its valuation down to roughly $1.04 trillion. That swap placed Berkshire in the seventh spot on the S&P 500, nudging Tesla down to eighth.
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What's Behind the Market Shift?
Berkshire's rise comes on the back of a strong fourth-quarter. The company posted $14.52 billion in pretax profit—far exceeding Wall Street's $12 billion estimate.
It also wrapped up 2024 with a staggering $334 billion in cash reserves, up from $325 billion the previous quarter, according to Cashreview. With those solid numbers, investors are betting on Berkshire's steady hand.
Tesla, on the other hand, had a rougher earnings season. Fourth-quarter EPS landed at $0.73, missing the expected $0.77. Dig a little deeper, and a portion of that came from bitcoin gains, making its core earnings look even weaker.
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Since its Jan 29. earnings report, Tesla's stock has tumbled around 15%, and analysts have cut their 2025 earnings estimates from $3.30 per share to $2.90, according to Investors Business Daily.
Despite the dip, Tesla's long-term backers still believe in its self-driving technology, upcoming EV models, and AI-powered robotics. But the recent stock movement makes it clear: even visionary companies need strong earnings to keep investors happy.
Tesla is also feeling the heat from competition, especially in Europe. Its sales in the region dropped 45% in January, with only 10,000 vehicles sold—while the overall European EV market grew 37%, according to MarketWatch. Chinese automakers, offering cheaper and more tech-packed EVs, are making gains in the market.
And then there's Tesla's public image. Musk's political ties—including his association with the Trump administration—have stirred controversy, with some consumers even calling for boycotts. While Tesla still dominates the EV space, shifts in consumer sentiment could have lasting effects.