Tesla TSLA Remains Attractive to Retail Investors While Interest in Other Tech Stocks Fades

Image: Patrick Pleul/Reuters

Tesla shares remain attractive to retail investors who have been actively buying them since the end of 2021. Meanwhile, their interest in shares of other technology companies was fading, the data show.

According to Vanda Research (via Wall Street Journal), net purchases by individual investors of a basket of eight popular technology stocks hit a recent peak in November before plummeting in late 2022. Since then, in early 2023, buying has picked up slightly and tech stocks slightly have begun to recover. Tesla shares fell 65% in 2022, the worst year on record. Facebook parent Meta Platforms Inc. sank 64%, and Netflix Inc. declined 51%.

However, in the case of Tesla, individuals have been regular buyers since the end of 2021, showing continued high interest. Purchases of shares in the Texas manufacturer doubled when their value fell at the end of 2022. Vanda found that retail investors have spent more money on Tesla shares in the past six months than in the five years prior. And on January 10, one-day net purchases of Tesla shares reached a record high of $316 million.

“As markets took a big hit, we saw retail investors shift into their favorite tech stock rather than investing across the whole sector,” Vanda analyst Lucas Mantle said of Tesla.

On January 25, investors are expecting Tesla's Q4 and FY 2022 reports. While skeptics have voiced their concerns about production disruptions, demand issues, and CEO Elon Musk's attention span following the acquisition of Twitter Inc., plenty of retail investors remain confident in the company.

Abhas Gupta, a 41-year-old entrepreneur from Irvine, California, said he moved his entire stock portfolio into Tesla shares in 2018. He lost his entire seven-figure retirement fund after taking out margin loans and using options to turbocharge his bets on Tesla. Still, he said he is far from calling it quits.

“I basically burned a lifetime’s worth of wealth, but none of this has shaken my confidence in the company. There is just no company even remotely close to Tesla on innovation,” Mr. Gupta said. “Why would I invest in a basket of dinosaurs?” he said of the S&P 500.

© 2023, Eva Fox | Tesmanian. All rights reserved.

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This article is for informational purposes only. You should not construe any such information or other material as an investment, financial, or other advice. Nothing contained in this article constitutes a solicitation, recommendation, endorsement, or offer by Eva Fox, Tesmanian, or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

Eva Fox holds zero shares of Tesla, Inc., and currently (at the time of this article's publishing) holds zero options or securities in Tesla Inc. and/or its affiliates.