Even though Elon Musk is now close with Donald Trump, is that enough to get regular people to invest in Tesla Inc. again?
It wasn’t too long ago that the stock of the electric car company, TSLA 8.19%, was almost always bought by regular people. People rushed to buy Tesla shares in 2020, and by the end of that year, they were over 740% higher.
Over the next few years, Tesla continued to get backing from individual investors. The company was in a race with Apple Inc. AAPL -0.12% to be the most popular stock among individual buyers. In 2022, it finally beat the iPhone maker.
However, Tesla is still a popular stock among small buyers, but the excitement around it has died down in 2024. There aren’t as many trades going on as there were in 2023, and shares are still down about 23% from their all-time high of $409.97 on November 4, 2021.
Also, Tesla isn’t the most popular stock among regular people anymore. That honor goes to Nvidia Corp. NVDA -0.84%, a company that makes semiconductors. Earlier this year, it passed Tesla to become the most traded stock in retail.
Still unknown is whether Trump’s presidency will be good for Tesla. Musk, the CEO, is said to have paid $130 million to help him get elected.
After Trump won the election, Tesla stock went through the roof, finishing the day after Election Day 14.8% higher.
Garrett Nelson, vice president and senior equity analyst at CFRA Research, wrote in a note, “We think that TSLA and CEO Elon Musk are perhaps the biggest winners from the election result. We believe that Trump’s victory will help speed up the regulatory approval of the company’s autonomous driving technology.”
Nelson also said, “Depending on the outcome of the House elections, we also see risks to current electric-vehicle tax credits from changes to existing tax legislation. This will widen TSLA’s competitive moat by making competing EV models even less profitable, as we believe TSLA is the only company that can make EVs profitable.” “For these reasons, we now think that TSLA shares deserve higher multiples, but we also know that there will be problems in the near future.”
During 2024, the buying habits of individual investors roughly followed the success of Tesla’s shares. In the first half of the year, individual investors bought fewer Tesla shares because the price was going down, behind the other “Magnificent Seven” stocks. They also stopped people from buying after the company’s dull robotaxi event in early October.
But if political factors help Tesla’s stock go up, regular people could try to catch those gains. On the night of the election, Robinhood Markets Inc. HOOD 4.02% saw a record number of trades. Tesla was one of the stocks that were moved the most. After being 0.38% behind the S&P 500 index SPX for most of the year, Tesla finally made up in the days after the election.
Even though Tesla has been on a recent roll, Nvidia was still the stock that individual buyers bought the most of. Whether that continues depends on both how well Tesla and Nvidia do in the future.
Mom-and-pop traders might choose one over the other in the next few months, but it’s hard to say for sure. Retail traders may put Nvidia at the top of their list of priorities because of the excitement surrounding the company’s earnings call on November 21. This is what experts from Vanda Research wrote in a note. “Another big report could keep people interested in NVDA.” A consensus-matching result, on the other hand, could become a “sell the news” event that puts TSLA back at the top of the list of stocks bought by consumers.
