Tesla fans keep buying, unbowed by the $720bn wipeout

The risks to electric-vehicle demand or Elon Musk’s preoccupation with Twitter have not been enough to sour Tesla investors on a stock that became one of Wall Street’s highest fliers during the pandemic

Tesla’s stock has dropped 73% from a record high in November 2021 and plunged 69% this year. Picture: Evan Agostini/Invision/AP

Tesla shares have suffered this year after its CEO Elon Musk bought Twitter, but individual investors’ in the eclectic car company have kept the faith through turbulent times.

Tesla’s stock has dropped 73% from a record high in November 2021 and plunged 69% this year.

Retail traders have continued piling into the shares, data from Vanda Research show. They have been strong buyers every day this month, driving their net purchases to record highs in both December and the fourth quarter.

Tesla jumped as much as 6.6% soon after the market’s open. But the shares gave back almost all those gains by late morning, threatening to extend a seven-day losing streak that has driven them down 70% this year and erased almost $720bn (€678bn) from the company’s stock-market capitalisation.

The drubbing has been fuelled by rising interest rates that battered growth stocks, worries that demand will erode if there is a recession, and concerns Mr Musk’s acquisition of Twitter will divert his attention and increase his sales of Tesla stock to keep the social-media company afloat.

Third-worst performer

The drop had made it the third-worst performer in the S&P 500 Index this year.

Yet, for Tesla’s diehard fans among retail investors, the risks to electric-vehicle demand or Mr Musk’s preoccupation with Twitter have not been enough to sour them on a stock that became one of Wall Street’s highest fliers during the pandemic.

“Retail investors have bought more Tesla stock over the last six months than they have done overall in the 60 months prior to this,” Vanda’s senior strategist Viraj Patel said. 

“For institutional investors, it’s a seller’s paradise when you have a buyer that is clearly not reading the fundamental signals.” 

Earlier this week, Tesla was hit by an 11% slump on fresh concerns about a production halt at its Shanghai plant and last week’s report that Tesla is offering US consumers a hefty $7,500 (€7,000) discount to take delivery of its cars before year-end.

That fuelled concerns about eroding demand ahead of fourth-quarter delivery numbers expected in early January. Estimates have been coming down in recent weeks, and on Wednesday, Baird analyst Ben Kallo was the latest to lower his, citing the “potential for weakening of demand”.

• Bloomberg