I think it will do the exact opposite of stabilize it... right now there is a large float and a lot of liquidity due to retail. Retail is simply much more likely to buy AND sell compared to a passive fund...
That is indeed the notion we all tend to hold. It is probably indisputable that TSLA retail investors are far more active and involved than are those of any other large cap corporation.
However active they are there are some other factors. Tesla also has one of the largest insider holdings also, with around 40% held by them (that is not really precise due to the heavy combination of aging options and recently exercised ones that change totals. Combining those with 42% most recently reported for institutional gives us 80%, the average institutional holding percentage for the Fortune 500 in 2019.
That proportion is probably fairly typical, although some reports using other samples sometimes go to 90% or so.
For the last couple of months short interest has been between one day and 1.5 days to cover, running less than 3% of float.
Can retail account for all the volatility, or even a major part of it? That is possible, but not plausible.
In my opinion the primary culprit is market makers and large speculators. Most of the largest speculators have probably tired of periodically losing their gains and more. Market makers, though, are pleased to use all their ability to manipulate markets.
The only caveat in my view is that 'Robin Hood', they of taking from the poor to give to the rich, plus retail brokers are making quite excellent returns from retail, primarily from the small but growing number of gamblers who are drawn to quick riches. They're carefully cultivated because of those profits, even from margin lending itself. Almost no reliable information about those actual patterns is available, because the primary market makers are private and disclose almost nothing at all.
The 'rule of thumb' in large retail brokers not long ago was that 5% of the customers made all the money. Now with commission-free and custodial-charge free retail trades being the rule, it is probably more like 3% of customers making all the money. At this point all the major brokerage revenues are coming from the truth 'pawn shop and gambling' trade.
In this environment it is hard to imagine that some unusual factors exacerbate Tesla volatility. First, the largest shareholder lives on borrowed money and that is highly profitable business. Second, all the quasi-institutional sell-side and speculators are making the market maker coffers burst with glee.
So, no I don't think retail is really a major force, but thanks to various Citadel interests, retail is providing an increasingly attractive part of that.
The greatest risk is that all this histrionic behavior continues to detract from actually promoting the Tesla Mission. That is sad. HODL, 'live long and prosper'.
