Tesla Stock Attracts Retail Bottom Fishing
Cathie Wood isn’t the only one favoring Tesla (TSLA) at recent valuations. Retail accounts have just made it their favorite stock in 2022 as transactions outpace the old favorite, Apple (AAPL). Money from retail trading accounts flowing into the company founded by Elon Musk increased by 424% to $15.41 billion, versus $2.94 billion in 2021. To be fair, the iPhone maker isn’t too far behind, as retail made $15.21 billion in cumulative purchases during the same period.
Vanda is a global independent research company that provides tactical macro and strategic investment analysis to institutional investors. In the firm’s, last research note of 2022, Marco Iachini, senior vice president of research at Vanda, shed some light and data on retail’s current favorite as institutional traders are placing more and more importance on money flows from self-directed investors.
Tesla’s share price has been moving lower in recent weeks as investors and analysts have been critical of the steps the billionaire has taken at his social media company, including the level of focus he has given to his new acquisition. They also show concern of the interrelationship between Musk’s wealth, Twitter’s financial needs, and any tie-in with how Tesla may trade.
Tesla shares are headed for a 60% decline in 2022, which is the worst sell-off since its 2010 public offering. Tesla’s year-to-date loss outpaces the S&P 500’s decline of 18% and the Nasdaq 100’s drop of 31%. The old favorite, Apple stock, has given up 23% during the year.
On a wider scale, investors in Tesla, Apple, and other large-cap tech companies have been slammed this year after two years of above-average returns. Vanda underscored Tesla’s popularity, saying the stock makes up about 11% of the average retail portfolio.
On the Robinhood platform, Tesla is the ninth most popular stock of the year, with Microsoft filling the top position.
Many institutional investors have, over the years, used retail interest as a sign of what to stay away from or even short. “Given its growing importance, we view retail activity around it as a crucial signpost for what may be an eventual full-fledged capitulation in 2023,” said Iachini, who wrote the research note. This flies in the face of institutional chief investment officer and founder of ARK Invest Cathie Wood, who has purchased slightly more than 445,000 shares of the EV manufacturer since October. Over the previous year and a half, Wood has been a net seller of Tesla.
Managing Editor, Channelchek