Tesla (TSLA) investors are buying at record pace, here’s why

Tesla (TSLA) investors have been buying the automaker’s stock at a record pace over the last few weeks. Here’s why we think they are doubling down.

Despite a less-than-stellar performance on the stock market over the last year, individual Tesla investors appear undeterred.

A new report from Vanda Research (via WSJ) shows that individual investors are buying Tesla stocks at a record pace.

We mean individual investors with broker accounts, not hedge funds and other institutions. Those investors bought just short of $17 billion worth of Tesla stock in 2022, which was a record.

Now just over two months into 2023, Vanda Research reports that individual investors have already bought over $13 billion worth of Tesla stock this year.

They are showing a lot of confidence in Tesla’s stock, which has been up so far this year, but that was after taking a brutal beating last year.

Now trading at $189 a share, it is still way down from its 52-week high of $384 a share.

Why are Tesla investors buying now?

That’s a tricky question to answer. Historically, Tesla has been a “story stock,” meaning that people were mainly buying into the story of Tesla rather than solid financials behind the company; this has changed over the last few years as Tesla began to consistently deliver strong financial performance and growth.

With Gigafactory Berlin and Texas now ramping to volume production, investors are expecting Tesla to deliver a record number of vehicles in Q1. And while margins are going to be negatively affected by recent price cuts, the automaker should remain profitable.

Tesla is also adding the Cybertruck to its lineup this year, but it is not expected to contribute meaningfully to deliveries or financials this year.

Another explanation for why individual investors were buying Tesla at a record pace this year could be in anticipation of the Investor Day that happened last week.

The Investor Day presentation received mixed reviews. Many were disappointed by the lack of significant news or announcement, but others were impressed by Tesla bringing a significant step change to vehicle manufacturing with its next-generation vehicle platform.

A “buy the rumor, sell the news” situation could have contributed to this surge in Tesla investors buying the stock.

Tesla investors are also known to be quite loyal and many of them rushed to buy last year’s dip. It will be interesting to see if the buying continues into the rest of the year.