> I'd think they're immune to the cult-of-personality effect, at least if approaching that stock from a fundamentals perspective.
> Is that view outdated, e.g. because of modern trading algorithms?
It's outdated or it might have never been true. It's not that much to do with modern trading algorithms IMO, but more about FOMO (Fear of Missing Out) and the general market culture.
There have been many frauds, near frauds or simply unviable business models, where institutional investors fell for it, including pretty obvious ones like FTX, Frank by Charlie Javice, DC Solar, WeWork, Uber and Theranos.
Everyone is afraid of missing the next Google/Nvidia/Microsoft/Apple, so anything goes in the hope that something, anything could hit it big.
Add in the extra belief that "green" stuff (which Tesla supposedly is) is super important, at a personal and global level, with many countries enacting bans on cars with combustion engines, and there was lots of belief in Tesla. At one point they were valued higher than all other auto manufacturers combined, while delivering a fraction of the output of the smaller ones like Renault. Under the mistaken and wrong assumption that it will somehow be harder for legacy automakers to switch to electric vehicles than it would be for Tesla to ramp up production. Spoiler: It's harder to manufacture a million cars than it is to put batteries in 5 of them.
This will probably not last with the new, higher interest rate environment we're in. Maybe.
BUT - at one point recently Tesla had a market value greater than the top 10 legacy automakers combined. It's simply insane for anyone to have thought Tesla was that valuable. For Tesla to be that valuable, just about everybody would have to be driving a Tesla. Tesla has too few models and customer tastes are too varied for that to have the remotest possibility.
In fairness to institutional investors, they weren't a _huge_ factor in Theranos's backing, were they? AIUI it was mostly, essentially, individual investment by specific individual rich people, and some VCs.
How much of "normal" stocks are owned by institutional investors?
I own plenty of Tesla through institutional investors, even though I don't want to, because my entire net worth is my house, emergency fund, and funds that hold concepts like "the entire market" or "all large cap companies"
I'm a Tesla investor. It's not about a cult. Tesla is the fastest growing manufacturing company in the history of the world. They are the only profitable EV company and deploy the most stationary storage. They are leaders in distributed energy services and are positioning themselves well to earn ARR from every battery and car they sell.
I used to wonder why anyone who wasn't part of the Steve Jobs cult would buy Apple since they sold overpriced junk. Then I wondered why anyone would invest in Amazon because nobody trusts online sales, they want to look at things before they buy. After I went to business school and learned financial modelling I decided I would never miss another category winner in a nascent large market again. Now I'm a millionaire.
> Tesla is the fastest growing manufacturing company in the history of the world
Is it? BYD was founded the same year and is producing nearly 2x as many cars as Tesla. NIO sold it's 500,000th car within 9 years of its founding, it took Tesla 15 years to do the same. We don't even need to look outside of car manufacturers to find counterexamples. Tell me again about it not being a cult.
I'm anywhere between indifferent and disgusted by Musks political views, depending on the issue.
Does that make me bearish on Tesla? Absolutely not. On the contrary I'm more bullish now than ever. I see so many people lose all objectivity and reason when they look at any Musk enterprise because they don't like the man
Here in southern california, it really seems like 50% of the cars on the road are Teslas. I can imagine that California is probably the main demographic. I wonder if they are reaching market saturation
Interesting, I would expect the opposite. The man is almost universally hated nowadays, and his antics are annoying. He should be tanking the stock price, not the opposite.
But you know what they say - the market can remain irrational longer than you can remain solvent.
I wouldn't be surprised if that 6% was Tesla's investment in Nvidia hardware appreciating. After all, it's not like Elon can build efficient or world-class training hardware himself, can he?
It seems like Tesla can stay in a hype state as long as there are big unknowns: the current ones being what will the effect be of AI + humanoid-AI-robots (optimus) bring to bear on their situation.
Also, Elon Musk regularly buys massive amounts of Tesla call options to force the market to cover. That jacks the price. Blatant manipulation of the stock.
I'd think they're immune to the cult-of-personality effect, at least if approaching that stock from a fundamentals perspective.
Is that view outdated, e.g. because of modern trading algorithms?
Caveat: I'm not an educated investor.