Stocks that fall are bought, pulling back the momentum after only 2 months, even though they dropped by 45% before.
According to Bloomberg, Tesla’s attraction to fans who are retail investors is unlikely to change.
Retail investors have remained steadfast even as the company’s troubles have piled up since April, sending the electric-car maker’s share price down a dizzying drop. And after last week’s 14% gain, that loyalty could boost the rally with investors once again, helping Tesla stock rebound.
“In May, we saw the highest monthly purchases of Tesla stock by retail investors since August 2020 when the company first announced the split,” said Vanda Research analyst Fabian Birli. share”. Regardless of the reason — possibly in anticipation of another stock split — Elon Musk’s army of fans continued to bet after the Twitter deal was announced or simply continued to buy. into stocks.
Net buying of Tesla stock by retail investors in May was $708 million as of Friday, the second-largest among tech stocks, behind only Apple. Tesla was the biggest gainer in the NYSE’s FANG index last week and was the third-biggest contributor to the S&P 500 as it posted its biggest weekly gain since November 2020.
Tesla shares have fallen 34% since their peak week on April 4 because of the company’s manufacturing troubles at its factory in China and investors’ concerns about slowing global growth. The buzz surrounding CEO Elon Musk’s purchase of Twitter didn’t help much either. Still, Tesla’s stock isn’t cheap compared to its rivals, with the company’s $786 billion market cap higher than many other global auto companies.
“The best way to look at this situation is to compare the cult group that Elon Musk has with the cult group that Bitcoin and other cryptocurrencies have so far,” said Matthew Maley, chief strategy officer of the company. Miller Tabak. “Musk has made game-changing products in many areas so the confidence level is also much higher and that’s why stocks can bounce back quickly when the whole market has stabilized, while Bitcoin continues to decline.”
Tesla did not immediately respond to comment on this matter. The company’s stock fell 0.2% on Tuesday.
As retail investors’ ability to influence the stock market has increased in recent years, companies have realized the value of attracting such investors with “tricks”. like a stock split – which lowers the price of shares and makes them more attractive to individual investors.
Big tech companies like Alphabet and Amazon also recently split shares in an effort to attract retail investors.
“Tesla loyalist retail investors hold an advantage over long-term shareholders in the company as these investors are willing to overlook the near-term negatives that soften the stock drop.” and can drive an uptrend at any time,” said Gene Munster, a former technology expert at investment fund Loup Ventures.
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