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How to Buy Tesla Stock
By Kristopher Kane MONEY RESEARCH COLLECTIVE
Investing in the stock market can be a great way to build wealth and secure your financial future. Two of the most attractive investment areas are tech and alternative energy solutions. Tesla stock is one of the most popular among both sectors.
Its innovative products and services have made Tesla a household name. It has become a leader as an electric car company and in the clean energy industry. If you’re interested in investing in Tesla, this comprehensive guide on how to buy Tesla stock will give you all the grounding you need.
Learn about the various options for investing in the company, the importance of diversifying your portfolio, investing tips and the risks involved.
Table of contents
- An overview of Tesla Inc. stock (TSLA)
- How to buy Tesla stock
- Best practices for buying shares in Tesla stock
- How has inflation affected Tesla’s stocks?
- Are Tesla stocks a good investment?
An overview of Tesla Inc. stock (TSLA)
Tesla is one of the most recognizable brand names in the world. After an initial investment of $6.5 million made entrepreneur Elon Musk the largest shareholder, he became CEO in 2008. He has remained high-profile, and Tesla has become a leader in electric vehicles and clean energy technology.
In 2010, Tesla went public, and its stock has since become one of the most widely traded on the market. Today, Tesla is worth around $600 billion, making it the most valuable automaker in the world.
What Tesla’s latest financial reports disclose
Tesla’s most recent earnings for fourth-quarter 2022 showed record revenue of $24.32 billion and earnings per share of $1.19. Automotive revenue accounted for over $21.3 billion in the final three months of 2022, with gross margins at 25.9%. The $21.3 billion figure represents 33% year-over-year growth.
The company acknowledged a downward trend in auto sales among electric vehicles and stressed the need for affordability in an increasingly competitive market. Regardless, Tesla stock value experienced volatility not seen since the most recent Tesla stock split.
Tesla’s stock split
In August 2020, the electric car manufacturer announced a five-for-one split, followed by a three-for-one in August 2022. In both instances, Tesla’s stock split allowed investors to buy multiple shares of Tesla stocks for the price of one before the split.
Both moves aimed to make the stock price more accessible to individual investors and attractive to institutional shareholders. Existing shareholders, including exchange-traded funds (ETFs) and managed mutual funds, saw a multiplication of their stock dividend payments.
Tesla’s current competition
Tesla faces competition from other electric vehicle companies such as Ford, General Motors, Volkswagen and Chinese car makers BYD and SGMW. Other staple automakers like Honda and Toyota want to compete with Tesla in the electric vehicle market and are expected to provide significant competition for Tesla in the future.
This is of particular concern to Tesla in the international market. In 2022 alone, Chinese manufacturer BYD more than tripled the previous year’s sales by selling over 1.85 million plug-in electric cars. SGMW also saw sales above 1.6 million units in 2022. Analyst conjecture places either or both companies on the board as stiff competition for Tesla in developing markets.
How to buy Tesla stock
If you’re looking to invest in Tesla — or want to know how to buy stocks in general — you can do it in multiple ways. You can choose from individual stocks, mutual funds and more. If it’s your first time buying stock, you may need to set up a brokerage account. Here’s a step-by-step guide to buying Tesla stock, including the options you have.
Choose an investment method
Before becoming a player in the Tesla stock market, you’ll need to choose a way to invest. Purchasing individual company stocks is today’s most common method of investing in Tesla stock. However, there are several different options for investing, including diversified ETFs, mutual funds and index funds.
Individual company stocks
When you buy individual stocks of Tesla, you’re purchasing a share of the company and becoming a partial owner. Individual stocks bought through a broker are the most straightforward method and can provide the highest potential return on investment. A downside is that it may be riskier than other options like mutual funds or ETFs, especially for beginner investors.
Exchange-traded funds (ETFs)
ETFs are traded on stock exchanges that track a basket of securities across several market segments or industry sectors, such as stocks or bonds. ETFs are typically more protected from risk than individual stocks because they are diversified. The price depends on the market and they can be bought or sold throughout the day when the market is open.
An ETF keyed to the performance of Tesla stock could theoretically provide investors with returns similar to a Tesla stock forecast but could help investors manage stock market volatility.
Mutual funds
Like ETFs, mutual funds offer an alternative that can shield investors from risk. Mutual funds are professionally managed portfolios representing many investors’ interests in a diversified securities portfolio. Tesla stock would just be one of many that you would purchase in a mutual fund share.
Mutual funds often have higher fees than ETFs. Additionally, they’re only bought and sold once daily at the end of the day, so everyone pays the same price. But, you may be required to make a minimum investment amount.
Index funds
Index funds invest in a basket of stocks meant to track a stock market index, such as the S&P 500. Index funds are generally less risky than individual stocks but also provide less growth potential. Several significant index funds invest in Tesla, including the S&P 500.
Open a brokerage account
Once you’ve chosen an investment method, you may need to open a brokerage account if you don’t have one yet. A brokerage account allows you to buy and sell stocks and other investments. To open one, first research different brokerages and choose one that best meets your needs.
You’ll need to fill out an application and supply personal information, such as your name, address and Social Security number. You’ll also need to provide financial information, such as your income and net worth. Once approved, you’ll be able to begin investing.
Decide how much you want to invest
Once you’ve opened a brokerage account, you must decide how much you want to invest. Your budget and Tesla stock prices factor into this decision. However, figuring out how much to invest is also a personal decision based on your financial goals and risk tolerance, among other things.
Consider your age, income, current financial situation and any existing investments you own. Another important consideration when creating a budget is leaving enough funding for your other financial goals while still being able to invest comfortably.
In addition, assess your risk tolerance and determine the type of investments suitable for your financial goals. Whether you invest in stocks, mutual funds, bonds or other opportunities, you can consult a financial professional for a tailored investment strategy that meets your needs.
You can invest as little or as much as you want, but it’s essential to understand that investing in stocks comes with risk. Only invest money that you can afford to lose.
Purchase your Tesla stocks
Once you have decided how much you want to invest, divide your total potential investment by the current share price of Tesla. Place an order with your brokerage for that number of shares.
Monitor your investment
One of the most common mistakes investors make is to buy a stock and then fail to keep tabs on it. Even if you plan to hold a long position, monitoring your investment is vital. Pay attention to Tesla stock forecast figures and how the stock performs over time. At the very least, aim for a mid-year investment portfolio checkup with a financial advisor.
Best practices for buying shares in Tesla stock
There are several best practices you should follow when buying shares in Tesla stock. Take the time to research the Tesla stock chart before investing. Look into the company’s financials, the competition and the industry trends.
You can examine Tesla’s stock price history over the most recent few months and identify a target price that will let you buy when the market is low. Above all, understand the risk involved. Tesla’s stock news isn’t always positive, so it’s essential to understand the potential for losses.
Understand analyst stock ratings
Before buying shares in Tesla, it’s helpful to understand Tesla stock predictions and how analysts arrive at their stock ratings. Analysts rate stocks according to their potential growth rate, risk level, industry and competitive position. Understanding analyst ratings can help you decide when to buy or sell Tesla stock.
Brush up on common stock market terms
Knowing common stock market terms before buying Tesla stock is important. Understanding terms such as dividend, P/E ratio and market capitalization can help you make informed investment decisions. Knowing the terminology and understanding how the stock market works can help you make wiser choices and maximize your potential for success.
How has inflation affected Tesla’s stocks?
High inflation has impacted Tesla’s stock price in the past and continues to pose some challenges for the automotive industry and the electric vehicle segment as a whole. In general, as inflation drives up the cost and interest rates rise, demand could slow down and the stocks could take a hit. However, Tesla dropped the price of some of its cars in an effort to make them more affordable. Still, inflation is something to be aware of when investing in any company.
Are Tesla stocks a good investment?
Tesla is one of the most talked about stocks on the market. It has become a household name with its innovative products and services, and many investors have been looking to buy stocks in this company. However, it’s essential to remember that investing in any stock comes with risk, and Tesla is no exception.
Despite technological advances in energy generation and storage systems, Tesla stock fell 65% in 2022. However, it has seen some recovery in early 2023. Still, the company saw substantial growth rates in vehicle deliveries, earnings and revenue in 2022.
If demand stays at current levels, Tesla may be able to produce fewer cars than it could sell this year. However, competition in the electric vehicles industry is increasing. Additionally, if supply chain issues worsen or other components come into play, Tesla stock could suffer. The effect of Federal Reserve rate hikes on automotive sales could also affect it. Lastly, it’s worth noting that Tesla stock is known for its volatility, partly due to its CEO — for example, the value fell when he purchased Twitter.
If you’re deciding if you should invest in Tesla, keep all of these factors in mind before making a decision. Tesla has traditionally been a growth stock and, therefore, riskier than some other more established market segments. If you want to add Tesla to your investment portfolio, consider consulting with a financial advisor to see how it fits.