Tesla Stock Drops Below $400. Retail Investors Keep Buying.

Coming into Thursday trading, Tesla stock was up 7% year to date and up 30% over the past 12 months. (Photo by SERGEI GAPON/AFP via Getty Images)

Key Points

• Tesla stock declined 6.6% to $401.99, making it the worst performer in the Nasdaq 100.
• Retail investors own approximately 41% of Tesla’s tradable stock, significantly higher than the 25% average for other Magnificent Seven companies.
• Retail shareholders have purchased $1.1 billion more in Tesla stock than they sold over the past week.

Tesla stock slumped on Thursday as the market took it on the chin. Despite recent declines, shares remain very popular with retail investors.

Shares of the electric vehicle maker traded as low as $396.34 before closing at $401.99, down 6.6%. The market clearly didn’t help. The S&P 500 and Dow Jones Industrial Average both dropped about 1.7%.

The Nasdaq Composite fell 2.3%, a sign that investors moved out of technology stocks. Nvidia lost 3.6%. The selling made Tesla shares one of the worst performers in the Nasdaq 100, according to Dow Jones Market Data.

Tesla’s stock is now down 0.5% this year through Thursday. It is the only Magnificent Seven stock, and the only trillion-dollar company in the S&P 500, to be negative in 2025. Tesla stock hasn’t closed below $400 since mid-September.

The market appears to be the main reason for Thursday’s declines, but shares have been listless since the company’s Nov. 6 annual meeting, where CEO Elon Musk learned that shareholders voted in favor of his trillion-dollar 2025 pay award by a margin of roughly three-to-one. Including Thursday, shares have fallen four times and risen only once.

Retail shareholders played a large role in the vote. A significant chunk of the EV maker’s stock is held by individuals, so-called retail investors, who own about 41% of Tesla stock available for trading, according to Bloomberg. For the rest of the Magnificent Seven, retail shareholders own an average of about 25% of the shares available for trading. The average level for stocks in the S&P 500 is about 5%.

Despite the post-meeting dip, JPMorgan reported in its “Retail Radar” report on Wednesday that retail shareholders have bought more Tesla stock than they have sold over the past week, by about $1.1 billion.

AI remains the big theme with retail investors. Nvidia and Tesla were the two most popular stocks for smaller investors, followed by Meta Platforms, AMD, CoreWeave , Oracle, and Apple .

All those stocks are part of the AI data-center buildout. Tesla, of course, is working on physical AI applications such as self-driving taxis and humanoid robots.

Tesla and Nvidia have been two of the most popular retail stocks this year. Smaller investors have added roughly $20 billion in Nvidia shares and $15 billion in Tesla stock to their positions.

Write to Al Root at allen.root@dowjones.com