Tesla is singlehandedly driving the highest retail investment into the stock market since 2020 as traders await Elon Musk’s master plan at the upcoming investor day
- Tesla has driven a big rebound in the retail FOMO trade as its stock has doubled in five weeks.
- Retail investors’ aggregate inflows into the stock market have reached levels last seen in 2020 and 2021, according to Vanda Research.
- “Tesla continues to draw unprecedented retail flows” ahead of CEO Elon Musk’s master plan reveal, Vanda said.
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The stock market has seen a resurgence in retail trading so far this year as a broad rally helps reverse some of the brutal losses from 2022.
But much of the rebound in activity, which has hit levels last seen in 2020 and 2021, is being driven by Tesla, according to a Thursday note from Vanda Research, pointing out that the stock represented a quarter of all single-stock purchases over the past week.
It’s of little surprise that retail investors have flocked into Tesla recently, as its stock has more than doubled from its low of $101.81 in just five weeks.
“Tesla continues to draw unprecedented retail flows… we believe that retail traders are currently chasing momentum in the stock aiming to recoup 2022 losses,” Vanda Research wrote.
And the buying frenzy for Tesla stock could continue in the coming weeks as investors gear up for the electric vehicle maker’s investor day on March 1, when CEO Elon Musk will reveal his Master Plan 3.
“Master Plan 3, the path to a fully sustainable energy future for Earth will be presented on March 1. The future is bright!” Musk tweeted on Tuesday.
Vanda Research expects retail flows to sustain their momentum up until the event, then losing steam afterward, similar to trading activity around prior stock splits or big showdowns at Tesla’s annual meetings.
Also aiding the rebound in retail trading activity has been the hype in artificial intelligence following the release of ChatGPT, which has helped investors fully understand the potential of the technology.
Shares of Nvidia, and to a lesser extent Microsoft, have exposure to artificial intelligence and have seen their stock prices soar so far this year.
“Interest in this theme is still high,” Vanda Research said. “Both companies are involved in the AI industry and are experiencing a growing interest from individual investors.”
Tesla could fuel the next leg of interest into these artificial intelligence stocks as traders seek to lock in profits and put the money to work elsewhere, according to the note.
“Should Tesla’s stock price continue its rapid ascend, leading retail traders to lock in profits or avoid adding further exposure, we expect demand to turn to Nvidia and Microsoft as alternative investment options,” Vanda Research said.