Is Tesla the Best WallStreetBets Stock? Hedge Funds Weigh In

The rise of retail-driven trading, epitomized by the WallStreetBets phenomenon, has reshaped market dynamics. Yet beneath the noise of meme-stock manias lies a critical question: Is Tesla, Inc. (TSLA) the institutional favorite among these stocks, or do hedge funds see better opportunities elsewhere? The answer hinges on analyzing hedge fund positioning, financial fundamentals, and regulatory shifts.

Tesla’s Institutional Appeal: A Tale of Contradictions

Hedge funds have amplified their bets on Tesla in early 2025, but their moves reveal cautious optimism. According to 13F filings, aggregate Tesla holdings rose by 107.9% in Q1 2025, with 7 out of 24 funds increasing positions. GAMMA Investing LLC alone added $1.49 billion in shares. Yet 7 funds cut exposure, including Daymark Wealth Partners, which reduced its stake by $6.4 million. This split reflects Tesla’s dual identity: a high-growth disruptor with risks tied to execution and valuation.

Key Data Points:
- Tesla’s institutional ownership stands at 66.2%, dwarfing peers like AMC (28.8%) and GameStop (25.4%).
- Analysts rate TSLA a “Hold” with a $292.18 price target, implying a -2.5% downside from its April 2025 price of $298.
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WSB Stocks: Speculation vs. Substance

While Tesla boasts profitability and scale, other meme stocks remain mired in red ink. Take GameStop (GME): its 2024 institutional holdings (25.4%) pale compared to Tesla’s, and its $396.6 million net loss in Q1 2024 highlights structural challenges. Similarly, AMC Entertainment (AMC) reported a $396.6 million loss, with its 28.8% institutional ownership reflecting limited faith in its turnaround.

Contrast in Financial Health:
| Metric | Tesla (TSLA) | GameStop (GME) | AMC Entertainment (AMC) |
|----------------------|--------------------|--------------------|--------------------------|
| Net Income (2024) | $15.0 billion | -$396.6 million | -$396.6 million |
| Debt-to-Equity | 0.04 (low risk) | N/A (negative equity) | N/A (negative equity) |
| Analyst Consensus | Hold | Strong Sell | Strong Sell |

Regulatory Shifts and the Hedge Fund Playbook

The SEC’s 2025 reforms, mandating monthly short-position reporting, could reshape meme-stock dynamics. While Tesla’s $775.7 billion market cap insulates it from volatility, smaller stocks like Lucid Group (LCID) or Clover Health (CLOV) face heightened scrutiny. The delay in reporting deadlines until 2026, however, gives hedge funds temporary opacity to maneuver.

Yet Tesla’s $15 billion net income and 14.4% net margin offer a stark contrast to meme stocks reliant on retail hype. As one analyst noted, “Tesla’s fundamentals justify institutional interest—others are lottery tickets.”

Conclusion: Tesla Leads, but Risks Remain

Tesla’s dominance in hedge fund portfolios stems from its proven earnings power, 66.2% institutional ownership, and analyst support. While meme stocks like GME and AMC attract retail fervor, their negative net income and low institutional backing make them speculative bets.

Final Analysis:
- Buy Tesla if seeking a high-growth stock with institutional credibility, but acknowledge its 53.5x P/E multiple.
- Avoid meme stocks without earnings: AMC and GME’s “Strong Sell” ratings and 60–90% downside risks underscore their fragility.

The data is clear: among WallStreetBets stocks, Tesla is the only one with the financial heft and institutional trust to claim “best” status—provided investors accept its valuation risks. For others, the game remains a gamble.