Tesla’s stock price hit its worst year ever this year. However, that hasn’t shaken the confidence of retail investors in Tesla and its CEO, Elon Musk.
Data from Vanda Research, a research firm, shows that retail investors are continuing to buy Tesla shares aggressively. Retail investors have been buying strongly every day this month, pushing net buying to record highs in both December and the fourth quarter.
On Wednesday, the persistence of retail investors paid off somewhat. Tesla shares closed up 3.3 percent at $112.71 on Wednesday, snapping a seven-day losing streak. But as of Tuesday, Tesla’s stock price has fallen 70% this year, wiping nearly $720 billion off its market value.
Rising interest rates are hitting growth stocks hard. Investors are also concerned that demand for electric vehicles will suffer if the economy goes into recession. In addition, Musk’s recent acquisition of Twitter will require him to manage the social media company and sell more Tesla stock to keep it afloat. These factors have exacerbated Tesla’s stock price decline. At one point, Tesla was the third-worst-performing stock on the S&P 500 this year.
But for Tesla’s die-hard fans, the risks facing the electric vehicle industry and Musk’s distraction still haven’t disappointed and worried them. Tesla has been one of the biggest gainers in the U.S. stock market during the outbreak.
“Retail investors have bought more Tesla shares in the past six months than in the previous 60 months combined,” said Viraj Patel, senior analyst at Vanda Research. For investors, it’s a seller’s paradise when it’s clear your buyers are not reading the fundamental signals.”
Tesla shares fell 11% on Tuesday as investors worried about the company’s production capacity. In addition, it was reported last week that Tesla is offering a substantial discount of $7,500 to U.S. consumers who are willing to make deliveries before the end of the year. That has raised concerns that demand will underperform in the fourth quarter. Tesla is expected to report fourth-quarter vehicle delivery numbers in early January. Estimates for Tesla’s vehicle deliveries have been falling in recent weeks. On Wednesday, Baird analyst Ben Kallo cut his forecast, citing “likely weak demand.”
Growth stocks overall have been hit hard this year. The Nasdaq 100 plummeted 35% as the Federal Reserve aggressively raised interest rates in an attempt to curb inflation. Tesla was one of the worst drags on the index. In the past two years, Tesla’s stock price has risen by 1163%, but this year’s performance has taken a sharp turn for the worse.
Ipek Ozkardeskaya, the senior analyst at Swissquote Bank, said: “It feels like a sudden loss of confidence and a sudden end to Tesla’s fairy tale. Investors are more eager to understand, the upcoming economic How the recession will hit Tesla’s demand, how competition from other EV makers will affect Tesla’s market share, and when will Musk stop other things to manage a faltering Tesla.”
