Are Investors Buying Tesla’s Nosedive?

Investors may be pondering whether it’s a better time to buy Tesla stock than an actual Tesla.

Amid the recent pushback against CEO Elon Musk, who has taken on a high-profile government role, the used car market is being saturated with Teslas at a record pace. According to Reuters, the share of trade-ins marketwide that are recent-model Teslas has more than tripled this year (1.4%) compared with the same time frame in 2024 (0.4%). Meanwhile, the proportion of new-car shoppers considering Teslas has fallen by almost half since November.

Amid reports of Teslas being vandalized, charging stations torched, and dealerships picketed, it’s a tumultuous time for the company and its stock. But some investors are seeing a buying opportunity.

Model Why

“If you read the news, it feels like, you know, Armageddon. I can’t walk past a TV without seeing a Tesla on fire,” Musk said last week during a company all-hands meeting. He suggested that people not sell their holdings, saying Tesla is positioned for a future in autonomous vehicles and robots. “Some people like Cathie Wood at ARK Invest do see the future. So what I’m saying is hang onto your stock,” he said.

The company’s shares have struggled this year, and some investors are seeing a buying opportunity:

• TSLA is down 43% from its record high of nearly $480 per share in December.
• The $13 million Simply Volt TSLA Revolution ETF, which has returned (-41%) this year, saw $3 million in flows year to date, compared with $12 million over a year, per Morningstar Direct data as of March 20.
• A leveraged Tesla fund, the $3.5 billion Direxion Daily TSLA Bull 2X Shares ETF, which returned (-70%), saw $3.3 billion in inflows year to date and $4 billion over a year.
• An inverse fund, the GraniteShares 2x Short TSLA Daily ETF, is up 76%.
• The average price of a used Model Y has fallen by about 15% over a year, and many are on the market for well under $30,000.

Seeing Red. Musk, the world’s richest man, is a major force in the Republican party, and conservatives like Tesla as a brand more than ever, according to survey data reported by NPR. Last year, the percentage of Republican new-Tesla buyers surpassed Democrats (independents were the highest percentage). Whether Republicans can turn things around for Tesla is unclear, since Democrats overall are 10 percentage points more likely to be interested in buying electric vehicles.

Still, cars aren’t usually an investment — even those bought at a discount generally depreciate. And despite its recent stock tumble, TSLA is still up 53% over a year and 693% over five.