Many social media, Tesla shareholders with a lot of followers are now imploring others to “hold on for dear life” (HODL). With Tesla stock down 61% year-to-date, these shareholders seem to believe that just because Tesla shares were nearly $400 at the beginning of the year, this means the stock is undervalued today at $158 per share. Their solution as Tesla investors is to HODL. In their view, there is practically no reason ever to sell Tesla stock. They believe nothing fundamentally has change about the company. They’ve concluded that the Twitter acquisition soap opera is just noise. One social media investor who manages an exchange traded fund with Tesla as its largest holding, believes the stock is actually worth $550. He recently tweeted, “We’re not selling Tesla at $170 per share.” Another investor stated that Tesla stock is “artificially depressed by variables that don’t align with the fundamentals and potential of the company.” A different financial analyst tweeted, “I will either fly high or crash and burn with Elon Musk [and Tesla].”
It’s clear to me that for some investors, HODLing is an emotional badge of honor and courage. It becomes a rallying cry for them and their followers not to panic-sell just because the stock price is down dramatically. Often the HODLers attempt to make those who sell the stock or who short Tesla seem weak, dumb, and even unpatriotic. All of these HODLers also are passionate Elon Musk supporters. Much of their HODL-passion stems from a belief that Musk will always win. They believe this current period of pressure on the stock will eventually turn around because of Musk.
Holding investments for the long-term is generally a good idea for the investor (versus the stock trader). This does not mean, however, that when the business prospects of a long term holding like Tesla changes that investors should never consider selling shares. The unemotional, objective investor should possess an ability to recognize when the future prospects of the business changes, particularly if the valuation of the company does not support that future. Many HODLers never come to a conclusion different from their tribe of other investors in the same asset. Social media makes remaining in that tribe very easy. Most refuse to recognize that past performance does not guarantee future results.
Disclaimer
TaaSMaster, LLC is not a registered investment advisor or broker/dealer. All investment opinions expressed by TaaSMaster, LLC are from personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors may occur.