Tesla’s retail investors are still buying despite a 34% drop in share price

Despite a deep stock drop, political backlash, and sinking sales, Tesla’s most diehard retail investors aren’t going anywhere. The electric carmaker’s shares have plunged 34% from their record high, and its second-quarter sales just dropped nearly 14%, missing analyst predictions.

Meanwhile, Donald Trump, now back in the White House, is publicly feuding with Elon Musk, escalating political heat on the company from all directions. Still, regular investors are standing by their man.

According to The Wall Street Journal, people like Nick Dolya, a 48-year-old living in Winter Park, Florida, are still all-in. Nick says he owns $500,000 in Tesla stock, and this year, instead of selling, he’s been adding more.

“I’m not a car junkie, but it’s very safe, and I think it’s one of the best car experiences. It’s kind of like what [the] iPhone was 10 years ago,” Nick said. He, his wife, and his daughter all drive a Model Y. He’s planning to buy a fourth Model Y when his youngest daughter turns 16 next year. His 20-year-old son didn’t get one because of limited chargers near his college campus.

Retail buyers double down as institutions pull back

Nick says he’s personally convinced 20 people—friends, neighbors, and coworkers—to buy a Model Y. He says it’s not about hype. He thinks half the cars on the road could eventually be Model Y vehicles. And while Elon is getting slammed from both parties in Washington, and his approval numbers are down, none of that seems to be shaking Nick or thousands of others holding the stock.

Even with falling delivery numbers, Tesla shares jumped 5% on Wednesday. That came just hours after the company’s disappointing sales report. And it wasn’t Wall Street driving that recovery. It was individual traders. On Interactive Brokers, Tesla was the most actively traded stock during the five days ending Monday. The platform logged 236,826 buy orders, massively outpacing the number of shares sold.

The buying frenzy didn’t stop there. Traders also poured into a fund that offers double the exposure to Tesla’s price moves, showing that retail traders are looking to juice their positions even more. They’re not cutting losses, they’re actually chasing them harder.

But Wall Street doesn’t share that optimism. Analysts are still warning that Tesla’s valuation is overinflated. Right now, the stock trades at 132 times its trailing 12-month earnings, way above its 10-year average of 125.7. By comparison, companies in the S&P 500 average just 22.2 times earnings. And many experts say that kind of multiple just isn’t sustainable.

Analysts lower targets while fans raise bets

Garrett Nelson, senior equity analyst at CFRA Research, released a note Wednesday with a valuation model that puts Tesla’s fair value at $258 per share, which is 18% below its current price. Garrett’s firm kept a “hold” rating and slapped a 12-month target of $320 on the stock.

Across 54 analysts tracked by FactSet, the average target is $311.12. So while retail investors think they’re buying early, analysts think they’re overpaying.

Still, this isn’t a normal stock story. Tesla has more retail support than any of the other top US tech companies, including Apple and Amazon. In FactSet’s breakdown of shareholder types, Tesla has the highest percentage of “other” investors, a category that excludes big institutions and insiders. It’s filled with individuals using trading apps, crypto bros on X, and people betting their future on TSLA.

Some say they’ve made serious profits riding the stock’s wild swings. Others are betting long-term, ignoring analyst targets and traditional metrics. The retail crowd has stuck around through every drop and spike, and they don’t seem scared of another one.

That belief extends beyond just stock ownership. Elon Musk has used the inflated share price to raise billions of dollars for his other ventures, many of which aren’t making money and probably won’t for a long time. But thanks to Tesla’s performance, he keeps getting more money. Love him or hate him, but Elon really is one of the greatest businessmen alive.

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