3 retail investors share what led them to cash out of Tesla on its way to a 50% drop

• Tesla stock has plunged as much as 53% since December.
• Some retail investors have exited their positions and avoided the stock's plunge.
• They told Business Insider what signs prompted them to sell early.

In investing, a selling opportunity often becomes painfully obvious only after the price of a stock drops dramatically. But for some retail investors, the writing was already on the wall for Tesla stock even before its precipitous plunge in 2025.

Investor exuberance swelled after President Donald Trump's election and into the new year, sending Tesla stock surging. However, the stock has been on a downward spiral this year, sinking as much as 53% from its all-time high of $479.86 in December to $248.71 on Friday's close.

While some retail investors are doubling down and holding, others have exited their positions. Business Insider spoke with three former Tesla shareholders to see what led them to sell their shares and avoid the stock's bloodbath.

Musk's cult of personality

One common thread that influenced all three investors' decisions is Musk's controversial personality.

Mikhaela Delahunty bought three shares of Tesla in August 2023. She sold them a year later, in August 2024.

"When Elon started having this alliance with Trump, I started to think about branding and how this would all play out for the typical Tesla consumer and the typical Tesla buyer," Delahunty, a PR specialist, told BI.

Dan Chan is a corporate magician who sold his Tesla shares in early January, before the inauguration. The biggest factor in his decision was Musk's leadership style and his political involvement.

Chan's familiarity with Musk goes way back — he was an early employee at PayPal in 1999 when Elon Musk was CEO. There, Chan signed a petition to remove Musk from PayPal.

Musk's political foray — through his extensive election spending for Trump and his DOGE plans — became the last straw for Chan. Chan thought Musk's leadership style and affiliation with Trump would rattle investor confidence and lead the stock to sell off, leading him to exit his position. Chan had been holding some of his shares since 2016 and realized a 1,900+% gain on some of them, documents viewed by BI revealed.

Chan sees similarities between what Musk is doing with DOGE now and what he did at PayPal.

"The reason why he actually got booted from PayPal is he wanted to change the stack of the programming language midway when we were bleeding money," Chan said. "He does things that are very rash, which is not good for government because when you say something and you switch it, people can't focus on their work when their jobs are at risk."

Business owner Jonathan Goodman bought Tesla stock during the pandemic because he believed the company was an industry leader in the electric vehicle space. Initially, Goodman thought Musk's outspoken personality was a boon to the stock, but ultimately, it was Musk's continued affiliation with the president that made him back out of his investment.

"Prior to Elon Musk's statements and actions being involved with this new presidency, Tesla was at the forefront of the electric vehicle industry," Goodman told BI. "I respect a good spokesman, right? And he is a very good spokesman for multiple things that he has done. SpaceX, xAI, Tesla — these are all things that are moving the industry and humankind forward."

However, after seeing Musk use a gesture that looked like a Nazi salute at the inauguration, Goodman sold his shares.

Bad business fundamentals

For Goodman, Musk's personality was the single factor that made him liquidate his shares — he still thinks the company's business model is solid.

"If Elon Musk were to resign from Tesla tomorrow, I would buy the stock again," Goodman said.

However, for Delahunty and Chan, the decision to sell wasn't solely based on Musk's antics.

"I started to notice that they had recalls. There was a Model Y recall for memory, then issues with the battery, and I started to think, 'Oh, that's not great,'" Delahunty said. Just this week, Tesla issued another recall, this time for its Cybertrucks.

The issues with the products, combined with Musk's political alliance with Trump, led Delahunty to believe that Tesla would lose its attractiveness to consumers.

Chan also had concerns about Tesla products that made him bearish on the stock. Specifically, Chan didn't like where the company was going with its self-driving car features. He felt Musk was not putting enough emphasis on developing safety mechanisms for self-driving technology and believed the company was trying to cut corners to keep costs low.

After Delahunty sold, she saw a lot of optimism for Tesla stock, but she doesn't regret her decision to sell well before the peak. "That was really interesting, just seeing it constantly being recommended by really reputable news agencies and investors and to see it actually being quite volatile," Delahunty told BI.

"I'm very glad I got out when I did," she added.