Brand sentiment: A Tesla Cybertruck is parked in front of a dealership in Austin, Texas. The company has long had an ardent fan base of individual investors who hang on to Musk’s every word on X, the social media platform he owns. — AFP
NEW YORK: Tesla Inc’s stock is in a freefall. Its sales are plunging around the world. Even its most avid Wall Street bulls are turning cautious.
But one group is buying the electric vehicle maker’s shares like never before: chief executive officer Elon Musk’s fans.
The company has long had an ardent fan base of individual investors who hang on to Musk’s every word on X, the social media platform he owns.
They analyse Tesla in great detail in online forums and largely function as a hype crew for the stock.
But their current level of enthusiasm is staggeringly high, even by recent historical standards.
Individual investors have been net buyers of Tesla shares for 13 straight sessions through last Thursday, pumping US$8bil into the stock, retail trading data from JPMorgan Chase’s global equity derivatives strategist Emma Wu showed.
That’s the biggest inflow over any buying streak since 2015, which is as far back as the data goes.
“I’ve missed several opportunities with TSLA in the past. Now that the stock has dropped significantly, could this be a good time to invest?” wrote the author of a post on the Reddit forum for Tesla traders.
Another said they were “very happy” to buy the stock at a US$225 to US$230 range. The shares closed at $236.26 last Thursday and were up 4.4% to US$246.61 in early trading yesterday in New York.
What makes the retail buying notable is Tesla’s share price has sunk 17% over this time, wiping out more than US$155bil from its market value.
“Tesla made some rookie to mid-stage public market investors extremely wealthy, a lot of people became millionaires because of this stock,” said Nicholas Colas, co-founder at DataTrek Research.
“People don’t forget that. And they will come back to a stock again and again if they feel it has been beaten up.”
Tesla shares have been on a steep slide since mid-December when it touched an all-time high fuelled by optimism from Donald Trump’s election victory.
But that euphoria vanished, with the stock retreating more than 50% from its Dec 17 record, making Tesla the second- biggest decliner in the S&P 500 Index this year.
The rout has been so brutal that last Thursday, Musk sought to reassure Tesla employees during an all-hands meeting.
The enthusiasm was palpable on X, formerly Twitter, where the stock was heavily mentioned, while on Stocktwits – another online forum for individual traders – Tesla topped the list of the website’s most active securities last Friday.
What’s become clear is what Wall Street thought would be a boon for the company – Musk’s prominent role in the Trump administration as the head of the Department of Government Efficiency – has instead become an albatross.
His growing political presence and involvement with controversies in Europe have triggered a backlash against the company and its leader, with the cars increasingly seen as political symbols.
Protesters have thrown Molotov cocktails at Tesla showrooms and vandalised charging stations.
Sales of Tesla cars have sunk in key European markets, such as France and Germany, as well as in China and Australia.
Global numbers won’t be available until the company reports its first quarter delivery figures early next month, but analysts across Wall Street have been aggressively cutting their estimates for sales and profits, citing the bleak data from around the globe.
Last Thursday, Morgan Stanley analyst and longtime Tesla bull Adam Jonas lowered his price target on the stock and reduced his sales expectations for the company, citing growing competition, an ageing vehicle lineup and a “buyers’ strike from negative brand sentiment”.
However, he kept his “buy”-equivalent rating on the shares, saying the weak near-term expectations are “not particularly narrative changing” for a company whose future depends on robotics and artificial intelligence.
Wedbush analyst Daniel Ives last Friday lauded Musk’s efforts for “hand-holding” employees and investors at a key time.
He said that if Musk continued to lead on his vision, the stock would be on a growth path where 90% of its valuation will be led by autonomous-driving technology and robotics. — Bloomberg
