We recently published a list of 10 Stocks That Will Go to the Moon According to Reddit. In this article, we are going to take a look at where Tesla, Inc. (NASDAQ:TSLA) stands against the other stocks.
FINRA Investor Education Foundation and CFA Institute (2023) revealed that ~37% of Gen-Z investors in the US and ~38% in the UK come to social media influencers regarding investment decisions. Therefore, it is important to explore the role finfluencers (influencers sharing financial advice on social media) play in providing investment information and how Gen-Z investors engage with finfluencers. Young investors are considering memes and viral videos as the primary source of investment advice.
Social Media and Investments: Do They Complement Each Other?
Experts believe that retail or non-professional investors are now becoming dependent on digital channels, like social media platforms such as TikTok, when it comes to investing.
FINRA revealed that ~60% of US investors under age 35 believe that social media can be used as a source of investment information. This compares to ~57% who use finance professionals. This increase is probably because digital channels are becoming easily accessible, with ~60% of the global population utilizing social media (as per DataReportal).
Quick-scroll websites are now considered the go-to spot for investment ideas and inspiration. This is because of their bite-sized format and easy access. Ofcom, which tracks news consumption in the UK – revealed that TikTok’s reach for news went up from ~1% in 2020 to ~7% in 2022. This was mainly seen in younger folks aged between 16 – 24 years. Pew Research mentioned that, in the US, this increased from ~3% in 2020 to ~10% in 2022.
Financial advice content, which is shared on social media, has been contributing to the growth of the “creator economy,” which is pegged at ~$127 billion globally (as per Coherent Market Insights). This is expected to reach US$528.39 billion by 2030, with growth stemming from higher demand for user-generated content and increased monetization opportunities. Financial institutions and investment advisory companies are now focusing on creating pathways from social media to their product and services to exploit strong market opportunities. Therefore, most retail investors continue to make investing decisions under social media’s influence.
Retail Traders Making a Significant Portion in The US Stock Options
JPMorgan Chase & Co. highlighted that non-professional investors are now making a bigger part of the US options market as they continue to pour money mainly into short-term bets and technology stocks. The bank highlighted that retail traders accounted for ~18.3% of the total options activity in June. Social media and online investing communities have influenced retail investors to the extent that these investors don’t shy away from making investments in the downturn.
In late July and early August 2024, when there was a sharp decline in popular technology shares, retail investors turned out to be net buyers.
Vanda Research mentioned that individual investors, who were caught up in the market downturn, continued to be net buyers of shares of leading technology and AI-related companies. Just to balance out the risks, retail investors directed significant buying to an ETF tracking 20-Y Treasury bonds. Wall Street experts and enthusiasts believe that this confidence comes from the online investing communities and social media platforms, where there were discussions about going long on leading technology shares as they were trading at “decent levels.”
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
25 Most In Demand Cars Heading into 2024
Tesla, Inc. (NASDAQ:TSLA)
Number of hedge fund holders: 85
Tesla, Inc. (NASDAQ:TSLA) is a vertically integrated sustainable energy company, aiming to transition the world to electric mobility by making electric vehicles.
The company’s intangible assets (brand value) and cost advantages are expected to act as primary drivers of revenue growth in upcoming years. Its strong brand cachet as a luxury automaker results in premium pricing, and EV manufacturing expertise allows the company to manufacture vehicles more cheaply as compared to competitors.
Tesla, Inc. (NASDAQ:TSLA)’s entry into high-performance computing is backed by the company’s strategic initiatives revolving around artificial intelligence (AI) and machine learning (ML). The company has envisioned a future in which both these technologies will play a central role in enhancing the capabilities of its vehicles.
Tesla, Inc. (NASDAQ:TSLA)’s supercomputer, Dojo, is expected to be a computing giant by 2024 end. With forecasts pointing to an expansion to 300,000 GPUs, Wall Street analysts believe that this supercomputer should achieve 100 ExaFLOPs of compute power. This is expected to further solidify the company’s lead in integrating AI and ML in its products.
Moving forward, the company’s focus on reducing its vehicle manufacturing costs, accelerating the launch of new models, and huge investments in lucrative AI initiatives should drive long-term growth.
In 2Q 2024, Tesla, Inc. (NASDAQ:TSLA) achieved record quarterly revenues amidst the difficult operating environment. Its Energy Storage business has been growing rapidly, setting a record in 2Q 2024 with 9.4 GWh of deployments. This resulted in record revenues and gross profits for the overall segment. Tesla, Inc. (NASDAQ:TSLA)’s plans for new vehicles, which include more affordable models, are on track for the start of production in 1H 2025. These vehicles are expected to utilize aspects of the next-generation and current platforms.
The number of hedge funds tracked by Insider Monkey owning stakes in Tesla, Inc. (NASDAQ:TSLA) grew to 85 in 2Q 2024, from 74 in the previous quarter.
China Renaissance raised the shares of Tesla, Inc. (NASDAQ:TSLA) from a “Hold” rating to a “Buy” rating. They gave a price target of $290.00 on 5th July. Baron Funds, an investment management company, released its second-quarter 2024 investor letter. Here is what the fund said:
“Tesla, Inc. (NASDAQ:TSLA) manufactures electric vehicles, related software and components, and solar and energy storage products. The stock contributed as Tesla continued to drive vehicle manufacturing costs lower, accelerate the launch of new models, and invest heavily in its lucrative AI initiatives. Shareholders reaffirmed the CEO’s compensation plan, alleviating personnel and legal uncertainties. Despite material operational complexities resulting in significant shutdowns of key manufacturing facilities and lower sales volume, Tesla presented better-than-expected margins in the quarter. It expects to launch a lower cost model as soon as late 2024, which should result in accelerated revenue growth, reduced manufacturing costs, and increased factory utilization. The company continued to advance its autonomous driving capabilities, expanding its already significant data centers and developing its humanoid robot Optimus. These investments increased confidence in the attractive growth opportunities that remain ahead.”
Overall TSLA ranks 3rd on our list of stocks that will go to the moon. While we acknowledge the potential of TSLA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than TSLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’
Disclosure: None. This article is originally published at Insider Monkey.
