How to Invest in Tesla
Even if owning a Tesla car is out of reach, you can invest in Tesla stock with as little as $1 and benefit from the company.
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Are you a fan of Tesla and looking to invest in the company? With the electric vehicle market booming, Tesla stocks have been a popular choice for investors. But how do you go about investing in this innovative company?
Here's a step-by-step guide to how to buy Tesla stock. We'll also discuss some factors to consider before investing in a company.
Is Tesla on the stock market?
Yes, Tesla is publicly traded on NASDAQ with the ticker symbol TSLA .
In 2010, the company became publicly traded at a price of $17 per share. As of November 2021, its all-time high was just over $400 per share.
With a value exceeding $500 billion, Tesla is considered to be one of the most valuable automobile manufacturers globally.
Now, here's how you can buy Tesla stock.
How to Buy Tesla Stock
You can buy Tesla stock using any brokerage or trading app. There are no special qualifications needed.
1. Create an Account with a Brokerage
Before you can start investing in Tesla, you will need to create an account with a brokerage firm or trading app. You can visit the brokerage's website or app and follow the instructions there to set up your account.
Typically, you'll need to provide:
- Your name
- Social Security number
- Address, phone number, and email
- Date of birth
You may also need to provide a copy of your driver's license or passport to verify your identification.
Don't have a ton of money to invest? Look for a brokerage that supports fractional shares. This means you can purchase just a tiny piece if you don't have enough money for a full share. This lets you to still invest in Tesla even if you only have $10.
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Robinhood | M1 Finance | Webull | |
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Get a Free Stock (worth between $5 and $200) - | M1 Investment Account - Up to $500 Bonus - | Get up to 12 free fractional shares - | |
Benefits and Features | |||
| Stock Trading | |||
| Minimum Deposit | |||
| Fractional Shares | |||
| Good For | DIY investing with passive portfolio management | Experienced investors; Active traders | |
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Robinhood: Pricing information from published websites as of 04/18/2020. M1 Finance: Pricing information from published website as of 02/28/2020 | |||
- Taxable: A general-purpose investment account
- Joint: An account shared between two individuals
- Retirement (includes Traditional and Roth IRA)
- 529 College Savings
- Custodial: An account set up for a minor
Keep reading for our top recommended brokers to buy Tesla stock.
2. Fund Your Account
Once your account is created, you will need to fund it to start trading. Just link it to your bank account so you can transfer money. Depending on the brokerage, you may need to deposit a minimum amount to start trading.
Be sure to read through the terms and conditions of the platform carefully before making any investments.
Now, you can start investing in Tesla stock.
3. Search for Tesla (TSLA)
Once you've funded your account and are ready to buy, search for Tesla stock using their ticker symbol 'TSLA'.
The company should appear, along with Tesla's other relevant data, such as current stock price and daily average volume.
Click on the company listing for more detailed information, including news updates and analyst ratings. It's smart to research the company and consider any risks before investing.
4.Decide How Much You Want to Buy
The next step is deciding how much Tesla stock you want to buy. Most platforms will let you enter how many shares or the exact dollar amount you want to buy.
For example, if the investing app allows for fractional shares, you can say that you want to buy $50 worth of TSLA (instead of full shares).
After entering the details, you are now ready to place your order.
5. Place your order
Once you have entered all the information, review it one last time and click 'place order' to complete your purchase of Tesla stock. Your order will be processed in a few minutes, and you will receive a confirmation when it has gone through.
After that, you can view your holdings in your account portfolio and track their performance over time.
- Market order: Execute the transaction now at the current market price.
- Limit order: Set a specific price at which you wish to buy. This gives investors more control. But if the stock never hits your price, the trade will never be executed.
Best Brokerages to Invest in Tesla
Here are some of our top recommended brokerages to buy Tesla shares. All these brokerages have no trading commissions.
Deposit $100 and Get $10 from eToro USA LLC
- Sign up for an eToro account
- Deposit $100
Get up to 12 free fractional shares
- Register and open a new account.
- Then, deposit any amount to get 6-12 free fractional shares.
Robinhood
Robinhood is one of the most popular investment apps for beginners. It has no minimum to get started. A big benefit is that it supports fractional shares, allowing you to invest in stocks with as little as just $1.
M1 Finance
M1 Finance is a unique hybrid DIY brokerage and robo-advisor. You choose your own stocks and build your own portfolio. Then M1 will automatically manage it for you at no cost. It also supports fractional shares. The minimum to start is $100.
Stash Invest
Stash Invest is designed for new investors who need a little handholding. It guides you to pick stocks aligned with your goals and risk tolerance, but you can also choose your own stocks. You can purchase fractional shares. There is a monthly fee starting at $3/mo.
Webull
Webull also has no trading fees or minimum investment. It offers better research tools and analytics for more experienced investors. It's also a good choice for active traders with free extended trading hours. Webull offers fractional shares for as little as $5.
Fidelity
Fidelity is a great choice if you're looking for a full-service brokerage with a wide variety of account types and other investment products. There is no account minimum. Fidelity also offers fractional shares from as little as $1.
Pros and Cons of Buying Tesla Stock
Pros:
- The most valuable automaker in the world
- Tesla options trade exceeds the S&P 500 options.
- New factory in Shanghai means sales have flourished in the Chinese market
- Constantly bringing new innovative products
Cons:
- Growing competition in the EV startup market
- No annual profit and inconsistent cash flow
- Considered high risk and overvalued by Wall Street experts
Why Invest in Tesla?
Tesla's market share in the US EV market increased from 59.3% to 62.4% in Q1 2023. And they remain to be unstoppable. Tesla plans to grow and spend big, creating "alpha versions" of the Cybertruck for production at their Austin, TX factory. Deliveries are expected to start in Q3 2023.
This is a clear indication of the growing popularity of Tesla's EVs among American consumers. It remains to be seen whether other automakers will be able to catch up to Tesla's success in the near future.
- Increased vehicle deliveries up to 422,875
- Increased revenue by 18%
- Net income decreased from 24% to $2.51 billion
- Lowered vehicle prices in late 2022 and Q1-2023
- Increase stock performance up to 48% in 2023
If you are not yet convinced, read on to learn more about the current performance of Tesla stock.
What is Tesla's valuation?
Despite the effects of the pandemic and inflation, Tesla's stocks have surged 73% since the start of the year. Shareholders are investing heavily, driving up its market capitalization by $200 billion in 2023 alone. Last April, the company's market cap stands at $585.55 billion, up from $389 billion at the end of 2022.
Now, Tesla's value is around $534.19B, with a price-to-earnings ratio of 49.57. This means the company trades at a much higher multiple than its competitors, like GM and Ford. It is an indicator for investors that the stock is overvalued.
Overvalued stocks are usually riskier investments, as the company's market cap could drop significantly if it fails to deliver on its expectations. So, investors of Tesla need to be aware of the risks associated with investing in such a high-priced stock.
To better understand, here are two common ways investors measure a company's value.
- Market Capitalization (Market Value)
Market capitalization (Market value) is how we measure the size of a public company. We do this by multiplying the current stock price by the number of shares outstanding. - Price to Earnings Ratio (P/E Ratio)
The P/E ratio shows if a company is undervalued or losing money. Low but positive means high earnings, while high negative means heavy losses.
- Companies with a P/E ratio above 30 or in the negative range are often labeled "growth stocks." This suggests that investors predict future growth or profitability.
- While positive P/E ratio below 10 are generally regarded as "value stocks," indicating that the company is already profitable and unlikely to see significant growth in the future.
Next, let's see how all this information fits your investment portfolio.
Is Tesla Stock Right for You?
When deciding whether or not to buy Tesla's stock, it's important not solely to rely on the current price. You should also consider if investing in Tesla aligns with your goals and risk tolerance. This ultimately depends on your style of investing.
Are you seeking to earn passive income through cash dividends? If so, it's worth noting that Tesla does not currently offer dividends and has no immediate plans to do so.
Also, it is important to assess how much risk you can handle. Keep in mind that stocks can be unstable, particularly in certain sectors.
For example, while Tesla has seen significant success, it's also thought to be overvalued. This means that stock prices could potentially drop significantly. So, it's better for you to plan on holding your investment for a few years to weather any market fluctuations.
If you are still having second thoughts about Tesla, you may want to consider these equally competitive stock alternatives.
Alternatives to Tesla Stock
You may want to diversify your portfolio or compare stocks within the automotive sector. Here are top companies, along with Tesla, that are good investment options. These are also among the leading investments.
- Ford
Incorporated in 1903, Ford Motor Company (NYSE: F) has become an American institution and is now one of the largest automakers in the world. Its iconic vehicles, such as the Mustang and the F-150, have contributed to its success.Ford's Q1-2023 Highlights: [2]- Market cap:$1.994B
- Revenue: $41.5 billion, 20% increase YoY
- Net income: $1.8 billion
- Ford Pro's EBIT tripled to $1.4B, and Ford Blue's doubled to $2.6B, exceeding a 10% margin.
- Market cap:$1.994B
- General Motors
General Motors Co. (NYSE: GM) is a global car manufacturer based in Detroit. It has operations in some 150 countries. The company produces cars and trucks under brands such as Cadillac, Chevrolet, Buick, GMC, and others. It was the biggest automaker in the US until 2008, when Toyota took over.General Motors' Q1-2023 Highlights:[3]- Market cap: $45.99B
- Revenue: $39,985 billion, a 11.1% increase YoY
- Net income: over $15 billion
- Free cash flow: $2,232 billion, a 36.5% increase YoY
- Market cap: $45.99B
Bottom Line
Before investing in any stock, it's smart to research the company to see if it's a good fit for your portfolio. After that, it's just a matter of finding the right brokerage for your needs.
Remember to regularly review your investments to see how they're performing and if you need to make any adjustments to your portfolio.
References
- ^ Tesla. Q1 2023 Update , Retrieved 05/12/2023
- ^ Ford. FORD'S FIRST-QUARTER VOLUMES, SALES, PROFITS, CASH FLOW ALL UP; DISTINCT SEGMENTS SHARPEN FOCUS, SPEED, ACCOUNTABILITY, Retrieved 05/13/2012
- ^ General Motors Co. GM Releases 2023 First-Quarter Results and Raises Full-Year Guidance, Retrieved 05/13/2012
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Paid non-client endorsement. See Apple App Store and Google Play reviews. View important disclosures. Investment advisory services offered by Stash Investments LLC, an SEC-registered investment adviser. This material has been distributed for informational and educational purposes only, and is not intended as investment, legal, accounting, or tax advice. Investing involves risk.
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