Retail investors pile into Tesla as shares remain under pressure

Individual investors piled into Tesla (TSLA) on Tuesday, seeing the recent drawdown in shares of the electric vehicle giant as a dip-buying opportunity for their favorite stock.

Tesla was the most popular buy among retail traders in Tuesday’s session, according to data from VandaTrack — even as the company missed out on a rally across the broader indexes following a lighter-than-expected inflation report.

Shares of Tesla slid 4.1% on Tuesday to close around $161, while the S&P 500, Dow, and Nasdaq each closed higher. Losses continued into Wednesday, with the stock down around 1% near 1:00 p.m. ET.

The company has had a brutal start to December, with shares down 17% so far this month and more than 50% year-to-date.

Despite the declines, net retail purchases of Tesla reached $610 million across the five trading sessions ending Tuesday, per VandaTrack’s analysis of individual investor trends.

Over the same five-day period, Apple (AAPL), Amazon (AMZN), NVIDIA (NVDA) and AMD (AMD) followed Tesla in popularity, with net retail inflows of $210 million, and $188 million, $147 million, and $90 million, respectively.

Retail investors piled into Tesla on Tuesday as shares notably underperformed the broader market. (Source: VandaTrack)

Selling pressure for Tesla has accelerated as concerns grow over CEO Elon Musk’s management of Twitter after he was forced to follow through on a $44 billion bid to acquire the social media platform. The stock has cratered roughly 28% since closure of the deal.

Adding to Tesla’s woes, Goldman Sachs slashed its price target late Tuesday to $235 from $305, citing the prospect of worsening demand as macroeconomic pressures persist. The bank maintained its Buy rating, however, with its outlook still positive over the long term.

“We believe that passing reduced costs on to consumers, as well as factors like expanding leasing programs and consumer tax credits, could help Tesla to drive growth and margins,” Goldman analyst Mark Delaney wrote in a note to clients. “However, the degree to which these levers will help volume, and the cost to Tesla to achieve them, will be key to monitor.”

Elon Musk’s photo is seen through a Twitter logo in this illustration taken October 28, 2022. REUTERS/Dado Ruvic/Illustration

Retail enthusiasm fades

Retail’s enthusiasm for Tesla came as investors bought just $681 million worth of U.S. securities on Tuesday, the lowest figure since the previous inflation report in mid-November, per VandaTrack. So far this month, retail flows into the market are down 20% from the year-to-date average.

Despite a slowdown in allocations, retail investors’ focus remains unchanged, with buys primarily in technology stocks, energy and some occasional dips, like airline stocks on Tuesday as they fell following a demand warning from JetBlue (JBLU).

Retail investors also have shown enthusiasm for Tesla’s electric carmaker peers like Lucid (LCID) and Rivian (RVN).

These names have underperformed the market as economic uncertainty prompts institutional investors to de-risk, with individual investor buying helping to offset losses, according to VandaTrack.