Retail traders rushed straight to purchase Tesla stock after it dropped as a result of the public feud between United States President Donald Trump and Elon Musk. Their fallout saw the price of the stock drop by 14.3%, which was its 11th worst single-day loss since the company went public back in 2011. And while the market was still processing the drama, small-scale investors wasted no time grabbing what they saw as a discount.
The fight started when Trump, now back in the White House, threatened to cancel all federal contracts tied to Elon’s companies. That threat came right after the two exchanged attacks on their competing social platforms. The tension blew up after Elon publicly criticized Trump’s tax-cut bill, which triggered the President’s warning shot. The once-friendly relationship between the richest man in the world and the most powerful politician on Earth collapsed in full view, and Tesla took the hit.
Retail traders bought $200 million worth of Tesla stocks
According to data from Reuters, individual investors dumped $201.3 million into Tesla shares after the price collapsed. They were also responsible for $2.6 billion in trading volume for the stock that day, making it the second-most purchased stock by retail traders. Marco Iachini, senior vice president of research at Vanda Research, said, “Tesla has been a favorite holding for this group for a while, so when they see a drop of 14% or more, they jump in and buy.”
Retail buyers did not stop with the stock, pumping money into leverage ETFs tied to it. The Direxion Daily 2x Bull ETF (TSLL.O), which lets traders bet on Tesla going up for bigger returns, took in $41.5 million in net buying that day alone. Even as the stock was tanking, traders were still going long. Over in the options market, things didn’t look chaotic either. Chris Murphy, co-head of derivatives strategy at Susquehanna International Group, said, “We’re not seeing a huge move in volatility.”
By Friday, Tesla had gained back some ground, climbing 5.6% and settling around $299. While it’s unclear exactly how much retail traders fueled the bounce, their presence in the action was obvious. Instead of pulling back, they leaned in. Even as Trump threatened to hit Elon’s empire financially, and even as the market dipped, traders still treated Tesla like it was on sale.
That belief was plastered all over Reddit and X, where Iachini said his models picked up on a massive wave of support. He said users of both sites were still positive on the stock. “Buy the dip is the overwhelming sentiment,” he explained. And that’s not new for Tesla. The stock has been a favorite among individual traders for years. It exploded 90% in just six weeks after Trump won the November 5 election.
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