Since the start of the year, Tesla's (TSLA, Financial) stock has experienced a significant decline, even causing its most ardent Wall Street supporters to become cautious. However, a dedicated group of Elon Musk enthusiasts is buying Tesla shares at an unprecedented pace, confident in Musk's potential to deliver substantial returns.
Historically, Tesla has attracted a fervent group of retail investors who closely follow Musk's statements on social media and base their analyses on his insights. Despite the stock's significant drop from its record high of $479.86, driven by concerns over weak demand, increasing competition, and Musk's controversial political role, retail investors remain enthusiastic. According to JPMorgan's global equity derivatives strategist Emma Wu, retail investors have net purchased Tesla shares for 13 consecutive trading days, amounting to $8 billion, a record high.
Nicholas Colas, co-founder of DataTrek Research, noted that Tesla has previously generated substantial returns for many retail investors, including newcomers and moderately experienced investors. This success has left a lasting impression, encouraging them to continue investing if they perceive the stock as undervalued. Colas emphasized that these investors are drawn to Tesla's future potential and Musk's capabilities, rather than current valuations.
Despite a nearly 40% decline in Tesla's stock this year, making it one of the worst performers in the S&P 500, Musk reassured employees in a recent meeting about the company's bright future. He highlighted Tesla's goal of producing 5,000 Optimus humanoid robots this year and urged staff to hold onto their shares amid market turbulence.
Even U.S. Commerce Secretary Howard Lutnick recently encouraged the public to buy Tesla stock, citing the company's exceptional leadership and innovation. However, Musk's increasing political involvement has sparked controversy, leading to intensified anti-Tesla activities and declining sales in key markets like Europe, China, and Australia.
Amid these challenges, Morgan Stanley analyst Adam Jonas lowered Tesla's price target and sales forecasts, citing intensified competition and negative brand sentiment. Nevertheless, he maintained a buy rating, believing that short-term setbacks won't alter Tesla's long-term narrative centered on robotics and AI.
