How To Buy Tesla Stock: Do you think Tesla is going to be at the forefront the future transportation technology? If so, do your research and ante up.
Tesla (TSLA) says that its mission is “to accelerate the world’s transition to sustainable energy.” Since 2003, when the company was founded, the company has been pushing the development and adoption of electric vehicles.
Here is what you need to know to buy Tesla stock.
Turbo Charge Your Portfolio with Tesla
Tesla started with cars and quickly progressed to an SUV (called Model X) and a truck (the Cybertruck), but it didn’t stop there.
Tesla is also an energy company. It makes the energy products that power its vehicles as well as a range of solar and storage products. Tesla even dabbles in grid services.
The company really is everywhere, and its varied interests allow it to be vertically integrated, but the fact that these abilities are marketable outside of the car world is big news.
Tesla has this technology that it is helping install all over the place. You have probably seen Tesla’s Supercharger stations or a Tesla Wall Connector.
Is Tesla Stock a Buy?
Tesla makes money in several different ways. Obviously, the company sells the vehicles it creates, but that is only part of it.
Tesla also deals in used vehicles. It sells the vehicles, both Tesla and non-Tesla, that its customers trade in to buy a new Tesla or return after a lease. Some of these are sold through third parties or remarketed.
Tesla also sells public charging. It installs special charging stations that recharge Tesla vehicles significantly faster than other technologies and it locates them near its Supercharger stations.
Tesla owners can use the charger for free if they bought their vehicle under the right sales program, otherwise, there is a fee. With so many ways to make money, Tesla has an interesting future as long as people like the vehicles it creates and/or the technology it develops.
What to Know Before Buying Tesla
That said, there are always risks in investing; nothing is a given. Make sure that you understand Tesla’s risk factors before you buy any shares in the company.
The thing about Tesla is that it doesn’t have the best track record. It went from making a relatively low run of vehicles leveraging automation to ramping up production volume very quickly. That would be difficult for any company, but Tesla did not have the wealth of manufacturing experience that another company may have or even best practices around a technology.
Tesla was making everything, including the system that powers its vehicles, and it hasn’t always gone smoothly.
In the case of the Model 3, it ended up having to reduce the level of automation and add manual processes back into production.
Tesla’s manufacturing often experiences bottlenecks too – and that also messes with demand.
Even if the newest Tesla is the coolest car on the planet, not everyone will be willing to wait to buy one. They will go elsewhere.
That may be no big deal if we were talking about a pair of shoes. People replace those often enough and they tend to have more than one pair – but this is a high-priced car.
No one wants to get a new one every year and even if you run your leases that way and it works for you, the car company is going to miss your business until you are ready to get in a new vehicle.
Keep in mind too, Tesla is very ambitious.
Even knowing that they experience these bottlenecks, the company is still pushing to incorporate new technologies, add novel designs, or otherwise innovate and expand. Examples include Tesla’s completely autonomous ride hailing network or its next-gen Autopilot.
The whole thing is very compelling and entertaining – What’s Tesla up to now? – but owning stock is another matter. Those innovations need to be able to generate enough profit to cover their costs or they are a drain on company resources.
Some loss is expected in R&D, but there needs to be a balance between profitable activities and unprofitable ones.
Open a Brokerage Account
If you decide you want to buy stock in Tesla, you will need to make another decision – how to do it.
While you could talk to a financial advisor and place your order with someone you know, most people open an account with an online brokerage.
There are several from which to choose. Schwab and TD Ameritrade are some of the big ones, but there are others. Many national banks offer some type of brokerage options. Pay attention to the following and decide for yourself which brokerage is right for you.
– Account Minimum: How much you need to open the brokerage account. Many online brokerages require minimum account balances or require that you meet a minimum in order to access certain features.
– Commissions: How much you pay per trade. Think of it as a transaction fee. At tastyworks, for example, zero commissions apply to stock trades (*clearing fees still apply).
– Frequency of Trades: If you don’t trade very often, you may be willing to tolerate a higher commission in exchange for other perks. In contrast, if you want to trade frequently (as in several times a week or quarter), you will likely be happier with a broker who supports that.
– Investment Type: Consider the type of investment you want to make. Some brokerages only work with stocks while others give you access to mutual funds, options, or currency.
– Research: Many brokerages give you tools to help you be a better investor. Pay attention to what sort of research the brokerage offers or balance out where else you get quality stock advice. If you are a member of a site like Financhill, getting stock advice from a brokerage will be less important.
– Support Options: Brokerages offer different support options. Some are available 24/7 while other brokers are more bare bones.
Place a Buy Tesla Stock Order
You might think of Tesla as an electric car company. You would be right, but that is really an incomplete definition of what Tesla does – and before you even THINK about buying stock, you really should have a complete idea of the company’s interests. Do your research, then make an informed decision about buying Tesla stock.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.