What Happens if I Buy Tesla Stock Today?

Table of Contents

Introduction to Tesla

Tesla is a multinational clean energy and automotive company founded in 2003 by Martin Eberhard and Marc Tarpenning. As CEO Elon Musk stated, the company aims to expedite the move to sustainable transport and energy through electric vehicles and solar power. Tesla has produced various car models, including the Model S, Model X, Model 3, Model Y, and Tesla Semi.

It is slated to begin production of the Cybertruck in 2023. With over 100,000 employees, Tesla designs build, sells, and services its products in-house. The company has become one of the world’s most valuable, with the most worldwide sales of battery-electric and plug-in electric vehicles in 2021.

Tesla Energy, a subsidiary of Tesla, is a significant installer of photovoltaic systems and a supplier of battery energy storage systems. However, Tesla has faced controversies and legal issues, including allegations of whistleblower retaliation and worker rights violations.

History of Tesla

Tesla, Inc. was founded in 2003 by Martin Eberhard and Marc Tarpenning in San Carlos, California. The company was named after the Serbian-American inventor Nikola Tesla, who is best known for his work on alternating current (AC) electrical systems. Tesla’s first vehicle was the Roadster, which was inspired by the AC Propulsion Tzero.

Elon Musk, who contributed $6.5 million to the initial round of investment, became chairman of the board of directors and oversaw the design of the Roadster. Tesla’s goal is to produce affordable mass-market electric vehicles and expedite the move to sustainable transport and energy through electric vehicles and solar power.

Tesla’s Current Financial Situation

As of March 31, 2023, Tesla’s stock price is $207.46, with a trading volume of 170,222,118 shares and a 65-day average volume of 175,950,354 shares. Analyst estimates for both quarterly and annual earnings per share are also provided.

Tesla’s financial situation has improved significantly over the past few years, with the company becoming profitable in 2021 and beating earnings per share estimates. The company’s revenue for the fourth quarter of 2022 was $24,318 million, and sales were $599 million, compared to $628 million a year prior.

Despite concerns over the company’s capital structure, Tesla’s retained earnings balance was positive at $331 million by the end of 2021. The company has also announced plans for a potential second stock split after a successful five-for-one stock split in 2020.

Factors Affecting Tesla’s Stock Price

Several factors have contributed to Tesla’s soaring stock price, including surging Model 3 deliveries, positive free cash flow, becoming self-funding, and ambitious plans for 2020. However, Tesla’s stock has returned -16.6% over the past month, and its future direction is uncertain. Factors that could influence its performance in the near future include earnings estimate revisions, revenue growth, last reported results, and stock valuation.

Another factor is the financial complex built around Tesla’s stock, including an array of investment products that exert a massive influence in the equity and derivatives markets. While the pandemic and green subsidies have helped push Tesla past the $1 trillion mark, its current valuation seems outlandish because the fundamentals related to electric vehicles do not yet exist.

Benefits of Investing in Tesla

Investing in Tesla has several benefits. First, the company has a strong competitive advantage in the electric vehicle industry, with a larger scale, stronger cash flow, and higher margins compared to its competitors. Second, Tesla’s rapid growth rate and compelling advantages make it a profitable investment, with analysts projecting that more than half of all vehicles sold in the US by 2030 will be electric.

Third, Tesla has diversified its revenue streams by producing energy generation and storage systems, which could help offset any potential downturns in the electric vehicle market. Fourth, Tesla has a visionary leader in CEO Elon Musk, who has been instrumental in the company’s success. Finally, Tesla’s net income in FY 2021 was $5.6 billion on revenue of $53.8 billion, indicating a strong financial position.

Risks and Rewards of Investing in Tesla

Tesla faces several risks when it comes to investing, including concerns regarding the cost of their electric vehicles, overcoming a competitive automotive industry, and the construction of the Gigafactory. The pricing for Tesla’s electric vehicles remains high, and they face competition from both legacy automakers and other EV manufacturers.

Increased competition could result in lower vehicle unit sales, price reductions, revenue shortfalls, loss of customers, and loss of market share. Gas prices and the increasing fuel efficiency of internal combustion engines also pose a risk to the adoption of electric vehicles, making it imperative for Tesla to sell more cars to remain competitive.

However, Tesla also has several growth drivers, including a strong brand image and customer loyalty, artificial intelligence, innovation culture, software, and its supply chain. Despite these growth drivers, the author of the report suggests a fair value of $206.99 and recommends a maximum investment of 5% of an overall portfolio.

Analysis of Tesla’s Financials

Based on the available Web Search Results, Tesla’s financials show both strengths and weaknesses. The company has seen significant growth in its stock price over the past decade, with shares skyrocketing from just over $33 in 2012 to over $1,000 in early 2022.

However, the company has a concerning debt story and capital structure, with a heavy reliance on debt for expansion and the majority of the debt due in the short term. Additionally, Tesla faces risks in terms of competition and the cost of its electric vehicles.

Despite these challenges, Tesla has several growth drivers, including a strong brand image and customer loyalty, artificial intelligence, innovation culture, software, and its own supply chain. It’s recommended to conduct a thorough analysis of Tesla’s financial ratios and metrics to gain a deeper understanding of the company’s financial performance.

What Happens if You Buy Tesla Stock Today?

Buying Tesla stock today could result in both potential risks and rewards. On the one hand, Tesla faces several challenges, including concerns about the cost of their electric vehicles, competition from legacy automakers and other EV manufacturers, and short-term debt obligations.

On the other hand, Tesla has several growth drivers, such as a strong brand image and customer loyalty, artificial intelligence, innovation culture, software, and its own supply chain. Additionally, Tesla’s stock is considered cheap with a forward price-to-earnings ratio of just 23, compared to Walmart which trades for the same multiple despite operating in a mature industry.

Ultimately, investing in Tesla stock is a personal decision that should be based on an individual’s risk tolerance, investment goals, and thorough analysis of the company’s financials and future prospects. It is important to remember that investing in any stock involves risk and potential loss of capital.

How to Buy Tesla Stock?

To buy Tesla stock, you need to go through a broker or an online trading platform that offers access to the Nasdaq stock exchange where Tesla’s stock is listed under the ticker TSLA. You can set up an account with an online brokerage and buy shares of TSLA through their trading platform.

Some brokers even offer fractional shares if you don’t want to invest a large amount of money. Before investing in Tesla stock, you should evaluate the company’s financials, research key metrics, and read reports by Wall Street analysts to determine if it’s a worthy investment.

It’s important to keep in mind that investing in any stock involves risk and potential loss of capital. Additionally, it is recommended to think carefully about how TSLA fits in your portfolio, and no more than 5% of your portfolio should be invested in any individual stock.

Tips for Investing in Tesla

Tips for investing in Tesla:

Diversify your portfolio: The best way to minimize risk is by diversifying your portfolio. Don’t put all your money in just Tesla stocks. Instead, spread your investments across different industries and asset classes.

Analyze Tesla’s financials: It’s important to carefully analyze Tesla’s financials before investing, including key metrics like revenue growth, profit margins, and debt levels. Additionally, consider Wall Street analysts’ reports to gain insights into the company’s future prospects.

Consider your investment goals: Before investing in Tesla, consider your investment goals and risk tolerance. Tesla is known for its volatility, so it may not be suitable for all investors.

Keep a long-term perspective: Instead of focusing on short-term gains, consider a long-term investment strategy when investing in Tesla. The company has several growth drivers, including strong brand image and customer loyalty, artificial intelligence, innovation culture, software, and its own supply chain.

Use a reputable broker: Use a reputable online broker to buy Tesla stock. Look for brokers with no account or inactivity fees, useful trading tools, and no trading commissions.

Remember, investing in any stock involves risk, and past performance does not guarantee future results. Always conduct thorough research and analysis before making any investment decisions.

Alternatives to Buying Tesla Stock

If you are looking for alternatives to buying Tesla stock, one option is to invest in an exchange-traded fund (ETF) that holds a portfolio of electric vehicle (EV) industry stocks. Three ETFs that offer exposure to Tesla include VanEck Vectors Low Carbon Energy ETF, ARK Industrial Innovation ETF,

and First Trust NASDAQ Clean Edge Green Energy ETF, each with varying levels of exposure to Tesla and different management fees and returns. Another alternative is to invest in ETFs that focus on clean energy, as clean energy investment needs to triple by the end of the decade to mitigate climate change and prevent energy market volatility.

Some ETFs that focus on clean energy include the iShares Global Clean Energy ETF and the First Trust NASDAQ Clean Edge Green Energy Index Fund, which respectively aim at global companies producing energy from renewable sources and American companies producing clean energy technology.

FAQs

What is Tesla’s ticker symbol and on which exchange is it traded?

Tesla’s ticker symbol is TSLA and it is traded on the Nasdaq stock exchange.

Is Tesla a profitable company?

Yes, Tesla has been profitable in recent years, with a net income of $5.6 billion in 2021.

What are some of the risks associated with investing in Tesla?

Risks associated with investing in Tesla include competition from other electric vehicle manufacturers, concerns about the cost of their electric vehicles, and short-term debt obligations.

What are some of the growth drivers for Tesla?

Some of the growth drivers for Tesla include strong brand image and customer loyalty, artificial intelligence, innovation culture, software, and its own supply chain.

How can I buy Tesla stock?

To buy Tesla stock, you can go through a broker or an online trading platform that offers access to the Nasdaq stock exchange.

What are some ETFs that offer exposure to Tesla?

Some ETFs that offer exposure to Tesla include VanEck Vectors Low Carbon Energy ETF, ARK Industrial Innovation ETF, and First Trust NASDAQ Clean Edge Green Energy ETF.