Thanks to its monumental growth over the years, Tesla (TSLA -0.40%) has become one of Wall Street's top performers. Shares of the electric vehicle (EV) business have soared a jaw-dropping 1,300% just in the last decade, easily outpacing the broader Nasdaq Composite index.

But the last couple of years have been difficult, as Tesla currently sits 58% below its peak price. The company is facing troubles that shareholders never thought would happen, and the financials are taking a hit.

I think investors should forget about this top EV stock. Instead, there's another booming business that deserves to replace Tesla in the "Magnificent Seven."

Pumping the brakes

To be clear, 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. But 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 first quarter of 2024, ended March 31), 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.

It's not a surprise that higher interest rates make buying new cars less affordable. This is something founder and CEO Elon Musk points to, as it results in higher monthly payments. Competition is also more intense than ever. Management has engaged in aggressive price wars to keep its cars selling and to maintain market share.

Musk expects the challenges to continue. In 2024, Tesla is projected to post "notably lower" unit growth than last year.

Press fast-forward

While Tesla appears to be driving backward, there's one thriving business that is pressing fast-forward. I'm talking about Netflix (NFLX -0.93%). The streaming stock is up 1,150% in the past decade, an almost identical performance to the EV enterprise. And it deserves a spot in the exclusive Magnificent Seven.

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.

Growth continues to be key for Netflix. It posted a 14.8% revenue gain in Q1, boosted by the addition of 9.3 million net new subscribers to the platform. These figures are astronomically higher than they were just five years ago.

Executives deserve credit for being able to successfully pivot to new areas in order to keep the growth going. Netflix's efforts to crack down on password sharers appear to be bearing fruit. Moreover, the new ad-based subscription tier is registering tremendous customer gains.

Netflix is also proving that its scaled business can generate outsize profits. The company's fixed cost base, mainly for the creation and acquisition of content, is more than offset by a rising revenue and membership base.

Consequently, Netflix's operating margin went from 10% in 2018 to 21% in 2023. This is the exact opposite situation that's playing out with Tesla, where profitability remains under pressure.

Investors who were looking to scoop up the EV stock might want to think twice. As of this writing, Tesla shares trade at a forward P/E ratio of 67.3, significantly above Netflix's multiple of 33.6. Not only does the streamer deserve to replace Tesla in the Magnificent Seven, but it also looks like the better stock to buy right now.