Tesla's Shine Fading as Retail Investors Shed Mega-Cap Tech Stocks
Tesla's Outflows and the Trend Among Retail Investors
According to JPMorgan analyst Peng Cheng, Tesla is losing its appeal among everyday investors in the current market downturn. Cheng found that the electric vehicle maker experienced the highest outflows from retail investors compared to other individual stocks in the past week. This reflects a larger trend among individual investors who are gradually selling off mega-cap technology names. In the previous week, retail investors pulled a net total of $411 million from Tesla, accounting for nearly one-third of the $1.25 billion net sold from single stocks during that period. Cheng noted that fellow mega-cap tech stocks Amazon and Meta Platforms also saw significant selling pressure from individual investors.
Performance Comparison and Investor Sentiment
Cheng highlighted that retail investors have likely seen an average return of 8.9% year-to-date, underperforming the 12% advance in the broader S&P 500 index. Tesla, which had a strong start to the year, is now on track to end the third quarter with a decline of almost 7%. Despite doubling in value in 2023, Tesla's shares remain lower than their 2021 closing price. Similarly, the S&P 500 and the tech-heavy Nasdaq Composite are expected to post their first negative quarters of the year, although both indices are still positive for the year overall, indicating the strength of the first half rally.
Changing Sentiment among Everyday Investors
Tesla has been a favorite among everyday investors in recent years, with Vanda Research reporting that it was slated to be the most bought security among retail investors this year. This popularity even surpassed the SPDR S&P 500 ETF Trust (SPY), which tracks the S&P 500. However, following Tesla's significant gains in 2023, Wall Street analysts see limited upside potential. The average analyst holds a "hold" rating on the stock and projects less than 1% upside, according to LSEG.
In conclusion, Tesla's allure is diminishing among retail investors as they continue to sell off mega-cap tech stocks. The outflows from Tesla reflect a broader trend in the market. Despite its previous success, Tesla's performance in the third quarter has been lackluster. The changing sentiment among everyday investors and the cautious outlook from Wall Street analysts suggest that the stock may face challenges in the near future.
Tesla's Luster Dims as Retail Investors Divest from Mega-Cap Tech Stocks
Outflows from Tesla Reflecting a Larger Trend
JPMorgan analyst Peng Cheng has noted a significant shift among everyday investors, with Tesla losing its appeal in the current market downturn. The electric vehicle giant has seen the highest outflows among individual stocks in the past week. This is indicative of a broader trend among retail investors who are gradually divesting from mega-cap technology names, including Amazon and Meta Platforms. For new businesses, this trend underscores the need to diversify their investment portfolios and not rely solely on mega-cap tech stocks.
Performance Comparison and Market Sentiment
Cheng's analysis suggests that retail investors have likely seen an average return of 8.9% year-to-date, underperforming the broader S&P 500 index. Tesla, despite a strong start to the year, is on track to end the third quarter with a decline. This performance, coupled with a cautious outlook from Wall Street analysts, may impact new business formations, particularly those considering investments in or partnerships with mega-cap tech companies.
Shifting Sentiment Among Everyday Investors
Tesla's diminishing allure among retail investors, despite being a favorite in recent years, signals a potential shift in market sentiment. This shift, coupled with Wall Street's cautious outlook for Tesla, suggests that new businesses should exercise caution when considering investments in mega-cap tech stocks. The current market trend underscores the importance of diversification and risk assessment in investment strategies for new businesses.