In recent weeks, they have acquired shares in Elon Musk’s electric car manufacturer at a furious pace, setting repeated records for one-day purchases. Already in 2023, they have spent a net 13.6 billion dollars on Tesla shares, approaching the record sum of almost 17 billion dollars for the whole of last year, according to Vanda Research.
Their interest in Tesla dwarfs that of any other security by a long shot.
“The aggregate retail inflow into Tesla has never been higher,” said Giacomo Pierantoni, chief data officer at Vanda, who added that buying among individual investors likely contributed to the 61% jump in the share price this year.
Tesla investors have a reputation for loyalty. They raced to buy the valley last year when the stock was cratering, and continued to pile in after it bottomed out on January 3rd. As Wednesday’s long-awaited investor day approached, purchases set new records.
The five-day moving average of individual investors’ net overnight purchases reached about $460 million in the last week of February, according to Vanda. The average for the second most popular security, the SPDR S&P 500 exchange-traded fund, was just under $150 million.
Three securities followed: Invesco QQQ ETF, a Nasdaq-100 tracker; apple Inc.
; and Amazon.com Inc.,
with interest rates at just a fraction of these levels.
Individual investors poured more than $500 million into Tesla shares Wednesday ahead of the investor day, which began at 4 p.m. ET. The event largely failed to live up to the hype. Some investors had hoped that a new, less expensive vehicle would be announced, to no avail. In addition, the company said it may need to spend nearly $150 billion in the coming years to achieve its long-term goal of becoming the world’s largest automaker by volume.
The stock fell 5.9% on Thursday after the investor day, but recouped most of those losses on Friday to close at $197.79. Tesla shares are still down more than 50% from their November 2021 record high of $409.97.
Durga Bobba, an investor who works on vaccine marketing at a pharmaceutical company, said he bought Tesla shares for the first time in December. Mr. Bobba, who splits his time between San Francisco and Philadelphia, had been interested in Tesla for some time and said he saw an attractive entry point late last year after examining the economics. “I saw the stock go to a one-year low and thought, ‘If I’m ever going to do it, now is the time,'” Mr. Bobba said.
“I’m a marketing guy, and the broad appeal was the first reason I bought Tesla,” he added. “People love it, regardless of age and gender.”
Mr. Bobba is one of many recent buyers who are sitting on significant gains. “I bought it for about $110 a share and I’m very happy,” he said. “I’ll probably never sell.”
Tesla shares currently trade at about 45 times the company’s projected earnings over the next 12 months, far from its peak of more than 200 times earnings, according to FactSet. During the selloff late last year, Tesla’s multiple approached 19.
For comparison, the multiples for General Motors Co.
Ford Motor Co.
and the S&P 500 are 6.8, 8.5 and 17.6 respectively.
The Federal Reserve’s campaign to raise interest rates changed the calculus for Tesla and other growth stocks last year. The stock came under further pressure as 2022 drew to a close as Tesla cut car prices and investors became more concerned that Musk was being distracted with his newly acquired Twitter Inc. Shares ended the year down 65%, their worst year-to-date decline.
They have rebounded in 2023 along with some of the market’s other most speculative investments, such as bitcoin and Cathie Wood’s ARK Innovation ETF.
Recent trading in Tesla has stood out even compared to the pandemic-era frenzy of 2020 and 2021, said Anthony Denier, CEO of online brokerage Webull Financial LLC.
“Tesla reigns supreme on our platform,” Mr. Denier said. “We’ve seen a huge increase in volume since December.”
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The share of accounts with Webull trading Tesla rose to 18% in February from about 4% six months ago, Denier said. Trading in Tesla, which typically accounts for less than 10% of Webull’s stock volume on any given day, reached about 35% of total volume in three days this year, he said.
Tesla is also one of the most popular plays in the options market. Many of the biggest long-term bets on Tesla are lotteries that require statistically improbable moves to pay out. One such bet is for the stock to reach $825 by January 2024. Nine of the 10 most popular contracts involve expectations that the stock will rise.
Many other investors are moving towards Tesla. The electric car maker remains the most shorted stock in the US, according to Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners. However, short interest in the stock has fallen to $15 billion as of Wednesday from a peak of more than $51 billion in January 2021.
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