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After a terrible year for technology stocks, every investor has lost interest in buying dips, with one notable exception. Tesla shares are still rallying. Inc.
TSLA 4.91%
Individual investors’ net buying of a basket of eight popular technology stocks hit a record high in November before slowing sharply in late November, according to Wanda Research. Buying picked up slightly in the new year as tech stocks rebounded.
As for Tesla, individuals have been consistent buyers since the end of 2021, and the stock has doubled by the close of 2022. And on January 10, Tesla shares achieved a one-day net purchase record of $316 million.
“When markets take a big hit, we’ve seen retail investors turn to their favorite tech stocks instead of investing in the sector as a whole,” Wanda analyst Lucas Mantle said of Tesla. “It could be the last shoe to drop.”
The Federal Reserve’s fight to curb inflation through higher interest rates last year has abruptly changed the outlook for big tech stocks, which have pushed the major stock indexes to new highs for years. Investors were forced to reassess the pros and cons of investing in companies with appeals.
Tesla shares are down 65 percent in 2022, their worst year on record. Facebook parent Meta Platforms Inc. 64% fell, and Netflix Inc.
It’s down 51 percent. But tech and other growth stocks rose to start the new year, buoyed by hopes the Fed will slow rate hikes. The S&P 500 rose 3.2 percent in January.
Investors are awaiting quarterly earnings reports from Tesla, along with Microsoft, next week. Corporation
Intel Corporation
And the latest updates on how other big companies are coping with tough economic conditions. They also vary the Fed’s preferred rate of inflation to provide clues about the direction of monetary policy.
Even as skeptics cite concerns about production disruptions, demand worries and CEO Elon Musk’s divided focus after buying Twitter Inc., Tesla’s most ardent supporters are keeping their faith in long-term payoffs.
Abhas Gupta, a 41-year-old entrepreneur in Irvine, California, moved his entire equity portfolio into Tesla shares in 2018, promising electric cars and disruptive innovations. He lost a seven-figure pension fund last year after taking out a margin loan and using options to hedge bets on Tesla, he said. Still, he said, the issue is far from over.
“I basically burned a lifetime’s worth of wealth; But none of this has diminished my faith in the company. There is no company that even comes close to Tesla in terms of innovation,” said Mr. Gupta.
“Why should I invest in a dinosaur basket?” He talked about the S&P 500.
Mr. Gupta said he is aggressively buying long call options on Tesla. While call options traders are not obligated to buy stocks on a certain date, options give them the right to sell.
According to Cboe Global Markets, overall option volume in Tesla has grown over the past few months. One of the biggest options on Tesla, shares will reach $825 in the next three years; The stock closed at $133.42 per share on Friday.
Gabriel Wilson, a 52-year-old physician who splits his time between Texas and New York, said the Fed remains a major concern in the market. In the year He said he transferred all his investments to Tesla after he leased the first Tesla Model X in 2018. He said he is looking to buy Tesla shares soon, despite exiting his holdings due to fears of market weakness near the end of 2021.
Despite last year’s market turmoil, they said they did not touch the nearly $100,000 trust fund for his son, which was held solely in Tesla shares.
“No one can compete with Tesla,” said Dr. Wilson. “I have no doubt that Tesla is the future.”
Many professional investors are cautious about tech stocks to start the new year. Fund managers pulled out of tech stocks in January and are underweight in the sector relative to historical positions, according to Bank of America. Corporate
Recent international fund manager research.
A Tesla semi-electric car parked outside a Frito-Lay manufacturing facility in Modesto, California.
Photo:
Benjamin Fanjoy/Bloomberg News
But some are betting that tech could buy again if the Fed plans to raise interest rates. Federal funds futures, used to bet on interest rates, show traders expect the central bank to cut rates later this year, even as Fed officials repeatedly say their job to slow the economy is not done.
Nikki Bourliofas, 51, said she bought shares in Advanced Micro Devices. Inc.
And Nvidia Corporation
Last year, then those semiconductor stocks struggled to avoid adding new positions. The Sydney-based financial PR consultant said she was looking for opportunities to take Tesla shares with Microsoft, Apple. Inc.
and letters Inc.
“As soon as there is a hint that interest rates are going to come down, I expect tech stocks to rally and I want to be there and put a position,” she said. I use their products and want to reap their profits.
Write to Hannah Miao at hannah.miao@wsj.com
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