After soaring throughout the pandemic, Tesla stock had its worst annual performance in history last year, dropping roughly 65%. Questions over rising competition in the electric vehicle space, coupled with recession fears, helped drive shares to a two-year low under $110 by late December. But 2023 has been a different story. Retail investors have flocked to Elon Musk’s EV giant amid sustained revenue growth and record profits, helping push the company’s stock up over 60% year to date.
After spending a record $17 billion on shares of Tesla in 2022, individual investors added another $13.6 billion to their total in just the first two months of this year, the Wall Street Journal reported Friday, citing data from Vanda Research. Tesla stock is still down more than 50% from its November 2021 high of roughly $410 per share, but Vanda Research’s head of data Giacomo Pierantoni told the Wall Street Journal's Jack Pitcher that record “retail inflows” are helping boost the company’s stock price.
The huge jump in Tesla stock purchases coincides with increasing retail investor optimism about the future of the U.S. stock market overall. A new Charles Schwab Trader Sentiment Survey found that bullishness among investors on Charles Schwab and TD Ameritrade nearly doubled this quarter after declining throughout 2022.
In the fourth quarter of last year, just 18% of U.S. investors were bullish on stocks, with 68% saying they were bearish. Now, 35% are bullish and just 48% are bearish. And young investors—who are more likely to purchase high-risk, high-reward stocks like Tesla—have shifted their views even more dramatically, with 40% saying they are now bullish compared to just 15% in the fourth quarter.
Tesla investors are known for their loyalty, and that was put on display ahead of the company’s annual Investor Day Wednesday. Individual investors bought $500 million worth of Tesla stock in a single day before the event, but shares fell nearly 6% the day after as some analysts argued that it didn’t quite live up to expectations—or was even a “waste of time.”
Greg Bassuk, the CEO of asset management firm AXS Investments, told Fortune Thursday that many analysts were hoping for “more meat on the bones regarding Tesla’s concrete 2023 plans to remain competitive in an increasingly crowded and price-sensitive EV market.” But Tesla stock recovered Friday, rising nearly 3% by midday. Garrett Nelson, an equity research analyst at CFRA Research, said that while some investors didn’t appreciate the lack of specifics regarding Tesla’s short-term outlook at the latest conference, long-term investors liked what they heard.
“In our view, the investor day helped solidify our belief that TSLA's massive valuation premiums to the rest of the auto industry are justified because the company is much more than an automaker: it is a 21st century, sustainable transportation and energy supplier,” he wrote in a Thursday note. “We believe the stock remains undervalued at current levels in light of the long-term growth opportunity.”
Nelson holds a buy rating on Tesla shares and a 12-month price target of $250. And he’s not the only Wall Street analyst who remains optimistic about Tesla’s future despite concerns about increasing competition. Wedbush’s Dan Ives, who has long been a Tesla bull, argued Thursday that Tesla is miles ahead of the competition in producing EVs, lauding the company’s “unrivaled” software ecosystem as well as plans for a new Gigafactory in Mexico and an EV priced under $30,000.
“We maintain our Outperform rating and $225 price target and came away very impressed by the Tesla foundation and Musk vision for the next decade,” he wrote in a note to clients.
