If you’re looking to invest in solar panels and electric vehicles (EVs) or add an automobile industry heavyweight to your financial portfolio, Tesla Inc. (NASDAQ: TSLA) should immediately catch your eye.
From maverick millennials to eco-friendly baby boomers, Tesla has been a fan favorite for environmentally conscious consumers worldwide. Tesla offers a way to reduce the onset of global warming and carbon footprints. It's also been instrumental in delivering solar-powered homes to people who seek clean and efficient energy for their lifestyles.
Ready to buy Tesla stock? Learn about the company, how its stock performs and how to add shares to your portfolio. Adding an eco-friendly, mainstream, popular brand to your portfolio now could result in dividends for years to come.
History of Tesla Inc.
- 2003: Started by Martin Eberhard and Marc Tarpenning
- 2008: Introduced Tesla Roadster to the market
- 2010: Went public with an initial public offering (IPO) of $17 per share
- 2016: Acquired solar panel manufacturer SolarCity
- 2020: Tesla Model 3 wins U.K. Car of the Year 2020, and its stock had a 5 for 1 split in August and traded at an all-time high of $695 per share in December.
- 2021: Tesla reached a new all-time high of $900.40 after it reported an EPS of $0.80 and revenues of $10.74 billion.
- 2022: Tesla’s stock value, while still relatively high, wavered between around $270 and $320 before falling to around $120 by year’s end.
- 2023: While Tesla stock has begun to recover in 2023, Elon Musk’s somewhat tumultuous foray into Twitter has impacted public sentiment around the firm.
How to Buy Tesla Stock and Stock Options
Tesla trades on the Nasdaq exchange under the ticker symbol TSLA. Tesla does not have a direct stock purchase option unless you are employed by Tesla. If you would like to buy Tesla stock or options, you need to go through a broker.
If you do not have a brokerage account, you need to open one to be able to buy TSLA shares. As a general rule of thumb, don’t invest more money than you can afford to lose.
Step 1: Buy Through Your Brokerage
Once you have your brokerage account set up, you can buy Tesla stock at market price or choose to buy a call or a put option on Tesla stock. If you choose to buy the stock at market price, you can hold onto the stock indefinitely or till you want to sell.
However, if you are purchasing a call or put option, it is only tradable up to a limited time. If you are buying a call option, you would be looking for the stock value of Tesla to go up before trading it.
On the other hand, if you are buying a put option, you would want the stock value of Tesla to go down before trading it. To know more about the difference between buying a call option and buying a put option, click here.
Step 2: Choose a Strike Price
If you are buying Tesla options, a strike price is the price that you are willing to pay to buy a stock option at a premium. For instance, if Tesla stock is currently valued at a market price of $239, you could set a strike price of $220 to buy put options.
In the near future, if Tesla's stock value dips below your strike price of $220, you could sell the put options at that time to turn a profit. In this case, if the Tesla stock dipped to $220, you could make a profit of $10 per put, minus the premium.
Step 3: Choose an Expiration Date
Every put-and-call option bought comes with an expiration date. After the expiration date, the options held by the investor become invalid. The expiration date can be set anywhere between one week to two months or several years.
Be wise while setting an expiration date, as it provides the window of opportunity to freely trade your call and put options. Remember that the longer you set an expiration date, the more premium you will pay on the options purchased.
Step 4: Decide How Many Contracts You Want
Each call or put option that you purchase of a particular stock is issued with a contract for 100 shares of stock. Depending on your budget and how you feel about a company’s prospects, you can decide the number of contracts you want to buy. You can also consult a broker or a financial adviser to help you decide.
Step 5: Watch Stock Prices
Is Tesla stock overvalued? It can be at times, but you may hold the stock long enough to extract value from your holdings. Some people ask themselves, “should I sell Tesla stock,” because they’re not sure if it can rise higher or if it will be overtaken by other EV manufacturers.
In August 2023, the 12-month average price target of Tesla stock is $253, with a high estimate of $350 and a low estimate of $24, according to the Nasdaq. While you hold onto Tesla stock, you should keep a close watch on its day-to-day valuations.
Cons of Buying Tesla Stock
As you check up on Tesla stock, remember that the Tesla stock discussion is not 100% positive. Tesla has issues of its own from its planned factory in Wolfsburg to reliability and Musk’s public persona that could turn out to be a little less than positive.
- Musk has a reputation for being eccentric. From twisted tweets to risky relationships, Musk’s actions have a direct impact on Tesla’s stock value. It comes as no surprise that a supervising board has been appointed to monitor Musk’s behavior.
- Musk’s online presence serves as an advertisement for other things like cryptocurrencies, SpaceX and anything else that might pique his interest.
- Tesla’s daily stock value has been volatile.
- Tesla stock does not pay dividends to its investors.
- Tesla vehicles have been hit with accusations that they are unreliable, unsafe and poorly built. While it’s difficult to sus out the complexities of a modern vehicle and the technology behind it, stock prices tend to rise and fall with the news cycle.
- Musk seems to be spread thin as news reports from early 2023 note that he’s been sleeping in the X HQ and selling off items from within the office.
Pros of Buying Tesla Stock
- The highly volatile stock price of Tesla gives investors a fair chance to sink their teeth into its stock without burning a hole in their pockets.
- Tesla is the first automobile company to go public since Ford in 1956. As of August 2023, Tesla is valued at a market capitalization of $748 billion. That’s more than General Motors and Ford combined.
- From self-driving cars to sustainable and economic energy reserves for your home, Tesla is ahead of the curve when it comes to innovation.
- Tesla has shipped more than 422,900 electric vehicles in the third quarter of 2023. Although plans to open a factory in Germany have been delayed, Tesla has a relatively new manufacturing plant in Shanghai, China, and is geared up to continue growth in 2023.
- Tesla has been able to deliver a record number of electrical vehicles in the face of a global pandemic and economic recession since 2020.
Rivian vs. Tesla Stock
Electric vehicles (EVs) and the EV sector have become increasingly popular in recent years. EV investors initially flocked to Tesla although Rivian Automotive Inc. (NASDAQ: RIVN) has become one of Tesla’s main competitors in the EV market. Could Rivian represent a better investment value than Tesla, especially given the wide disparity of each company’s current stock prices?
What is Rivian?
Founded in 2009 by RJ Scaringe, Rivian is an EV manufacturer based in Irvine, California. The company’s original name was Mainstream Motors, which was later changed to Avera Automotive. The company then became Rivian Automotive in 2011 and retains a focus on the manufacture of electric and autonomous vehicles.
Rivian Automotive Inc. went public on Nov. 10, 2021, in an IPO priced at $78 per share. The initial offering saw sales of as many as 153 million shares and raised a total of $12 billion for the company’s future growth. The IPO valued the company at $66.5 billion, although the stock opened at $106.75 and closed trading on its first day at $100.73 per share, valuing the company at $86 billion. The valuation was more than that of traditional automaker Ford Motor Co. (NYSE: F), which was also one of Rivian’s largest financial backers.
Rivian’s main manufacturing plant is located in Normal, Illinois, and it maintains additional facilities in Carson, California; Wittman, Arizona; Plymouth, Michigan; Vancouver, British Columbia (Canada); and Woking, England. The company has plans to build another $5 billion plant in Georgia.
Rivian’s growth has been exponential in recent years. Although the company had just 100 employees at the end of 2016, it grew to employ 3,000 people by November 2020. As of its IPO date in November 2021, the company had more than 9,000 employees.
Rivian currently makes two EVs. The first is the R1T, a truck with four electric motors. The second is the R1S, a sport utility vehicle (SUV) that shares the electric chassis of the R1T.
Rivian began deliveries of its R1T Launch Edition in October with a price tag of $75,000, excluding the $1,075 destination charge for delivery. The R1S is expected to begin deliveries sometime in early 2022 and will be priced at $70,000.
Like most EV manufacturers, Rivian’s EV manufacturing is based on a skateboard automotive platform or chassis, a self-contained unit that significantly cuts the manufacturing costs of EVs. Rivian’s EV automotive chassis serves as a base platform for its vehicles.
Rivian’s skateboard chassis includes the electric motor, batteries and other electrical components used in its EVs. It also includes removable units at the wheels that house the steering, powertrain, suspension and braking systems.
How Does Tesla Compare to Rivian?
Tesla Inc. went public on June 29, 2010, at an opening price of $17 per share after having been a private company since 2003. Tesla’s stock has soared and currently trades at $238 per share. If you had purchased 1,000 shares of Tesla at its IPO price of $17 per share in 2010 for $17,000, your stock would now be worth $675,969 at current prices.
Tesla was the first U.S. automaker to go public in 54 years at the time of its IPO, and it continues to be the leader in electric car manufacturing. Despite having only a roughly 3.66% share of the U.S. automobile market, Tesla’s market capitalization of $748 billion is more than the world’s five largest automakers combined.
Tesla’s trailing 12-month average earnings per share (EPS) is $3.53, which makes its price-to-earnings ratio (PE) approximately 67. This means that at Tesla’s current stock price, the company’s stock is trading at 67 times its earnings, which is massive compared to the average PE ratio in the Group 1 automotive manufacturing sector of 6.
Tesla had a very successful year in 2023. The company increased its EV deliveries and profitability and generally set the standard for other EV makers to follow. Despite increasing its production numbers and raising prices on its vehicles, Tesla continues to have a growing order backlog since the demand for EVs has increased significantly in the past few years.
While Tesla and Rivian both manufacture EVs, Rivian has only two EVs, neither of which is an automobile. Tesla also has a more developed market that feeds its growing backlog, although increased delivery wait times mean impatient potential customers may decide to buy a competing EV.
Tesla also manufactures batteries and energy generation and storage systems, which provides it with additional revenue and lowers the production costs of its EVs. Rivian has plans to build a $5 billion battery and assembly plant east of Atlanta that will employ 7,500 people.
With respect to how Tesla stock compares to Rivian’s, Rivian’s stock currently trades at $20.07 per share and has a trailing 12-month EPS of a loss of $6.46. The company’s market capitalization is $18.9 billion, less than ⅒ of Tesla’s market cap.
Rivian began deliveries of its R1T truck in October 2021, and has considerable backing from Ford and Amazon.com Inc. (NASDAQ: AMZN). Amazon has ordered a significant number of Rivian’s EV trucks for its product deliveries.
Rivian has considerable room to grow. In contrast, Tesla’s stock has over a decade of trading history and currently trades at more than 10 times Rivian’s stock price and roughly 65 times earnings, while Rivian has yet to make a profit.
How is Rivian Stock Performing?
Rivian’s stock price has shown considerable volatility since the stock began trading publicly in November. After going public at $78 per share, the stock has traded as high as $179.47 and as low as $14.
At its current stock price, Rivian has a market cap of $20.3 billion. Although it is a relatively new addition to the automobile manufacturing industry, Rivian’s market cap already is almost equivalent to Fiat Chrysler Automobile's N.V. at $25.4 billion although it is still far below Tesla’s massive market cap of more than $751 billion.
Rivian’s stock price reflects the public’s expectation of substantial future growth and profitability. As the company develops its markets and infrastructure, which will include a network of charging stations and a battery manufacturing plant, the price of its stock could continue to appreciate.
How is Tesla Stock Performing?
Tesla’s stock has performed phenomenally well over the past decade and has been one of the best-performing stocks in recent history. After range trading for years, Tesla’s stock price exploded to the upside after the beginning of 2023, rallying over 100% from less than $115 per share to its current price of more than $238 per share, as you can see from the price chart below.
Does Rivian Have a Better Outlook Than Tesla?
Tesla’s stock price has already appreciated considerably and has doubled over the past year alone. Even though the outlook for Tesla’s stock remains positive, in large part because of the company’s substantial order backlog, the price of its stock may find tough resistance at its all-time high of $381 on Nov. 4.
In contrast, Rivian’s stock trades at ⅒ the price of Tesla stock. While both stocks have a positive outlook for future appreciation, Rivian’s stock price could appreciate considerably more than Tesla’s in percentage terms. Investors also need to consider whether they’ll get a better return on 10 shares of Rivian or one share of Tesla.
Tesla Chief Executive Officer Musk has a number of other ventures, including SpaceX, which could indirectly affect the price of Tesla’s stock. Musk hinted at a possible bankruptcy risk for SpaceX because of a lack of progress on engines that created a "genuine risk of bankruptcy … if we cannot achieve a Starship flight rate of at least once every two weeks next year.”
Musk has already been a heavy seller of Tesla around present levels in recent months, but if he has to bail out X financially, he may consider selling even more of his substantial Tesla stock holdings. This could put significant pressure on Tesla’s stock price.
Why Invest in Automakers?
Today, Tesla finds itself in an exclusive category. Despite having an operating history of less than two decades, Tesla stock commands a market capitalization of nearly $750 billion, making it the world’s most valuable automaker — and it’s not even close. Consider that at this moment, Tesla is worth more than twice the value of auto manufacturing giant Toyota Motor Corp. (NYSE: TM).
While no one can perfectly predict the future, the dramatic success of Tesla stock may rise should consumer behaviors continue on their implied trajectory. First, younger generations — millennials and Generation Z — place a premium on corporate social responsibility efforts. It’s no stretch to assume, then, that modern consumers will also place a greater emphasis on environmental responsibility.
Evidence indicates that people across all demographics realize the importance of sustainability. A July 2020 McKinsey & Company survey revealed that because of the COVID-19 pandemic, a vast majority of European consumers believed businesses should focus more intently on reducing pollution. Further, 57% of survey respondents declared that they made significant lifestyle changes to reduce their carbon footprint.
And don’t assume that the U.S. is lagging in this department. According to a Pew Research Center report, most Americans support measures to address climate change. This dynamic helps explain why Tesla stock and its EVs captured the public’s imagination — by driving these sleek machines, consumers can have their cake and eat it too.
Not surprisingly, legacy automakers have caught on, with many eagerly developing their own EVs to compete with Tesla. Although the TSLA fanbase remains confident that the underlying company can fend off would-be rivals, shareholders should at least be aware of the challenges in the next phase of the electric mobility revolution.
Below are key factors to consider.
Ubiquity and Its Liability
While it’s true that Tesla’s pioneering ethos and innovative approach made EVs almost ubiquitous, down the road, this attribute can become a liability. For instance, the first set of Tesla buyers felt special, essentially becoming personal mobility pioneers. But as Tesla expands its brand by offering more options — particularly the relatively cost-friendly Model 3 — the company will invariably introduce a sameness to EVs. This backdrop provides a perfect opportunity for big-name rivals — think Mercedes-Benz or BMW — to jump in and provide much-needed diversity.
Ample evidence indicates that throughout the world, environmental advocacy groups succeeded in evangelizing the importance of sustainability to customers. Up to a certain point, people will choose the environmentally responsible product over the less sustainable one. However, a separate McKinsey survey of U.S. consumers revealed that price and other attributes were more important than sustainability. Despite Tesla’s efforts to provide reasonably priced EVs, even its cheapest models are incredibly pricey for the average household. This circumstance opens the door for lower-cost vehicle competitors.
Although Tesla stock skyrocketed on the mainstreaming of EVs, you don’t want to make the mistake of thinking the legacy automakers are irrelevant. On the contrary, it may take decades for electrically powered competitors to usurp their fossil-fueled counterparts. According to the Brookings Institution, it’s difficult for modern societies to quit dirty energy because fossil fuels carry incredibly high energy density. Nowadays, it’s not unusual for contemporary cars to travel 30 miles on a single gallon of gasoline. EV batteries don’t have nearly the same energy density.
Unlike EVs, the infrastructure for combustion-based cars already exists. Therefore, to convince the masses to make the switch, both governments and corporations must invest heavily in charging station infrastructure. Without this rollout, it’s improbable that electric automakers will overtake their traditional counterparts. Keep in mind that only 63% of U.S. housing units have a garage or carport, limiting the pool of consumers that can charge their vehicles at home.
Innovation is Universal
Undeniably, a major draw for Tesla stock is that the underlying company continues to pour millions of dollars into research and development, manufacturing vehicles that rival their combustion counterparts in features, conveniences and most importantly, range. However, legacy automakers are also busy innovating. Today’s combustion cars are much more efficient than ever while significantly mitigating their emissions output.
Tesla Stock Competitors
While Tesla didn’t invent the electric vehicle, you can make a strong argument that it was the brand that made it fashionable. Prior to its debut, automakers developed hybrid vehicles combining combustion engines with electric propulsion systems. The auto industry experimented with fully electric cars.
But it wasn’t until Tesla came along for people to realize that EVs can be environmentally friendly and cater to consumer desires. Thanks to blistering performance statistics and attractive design elements, driving electric vehicles became less of an obligatory duty to save the planet but rather a privilege.
Li Auto (NASDAQ: LI)
Also known as Li Xiang, Li Auto is one of many Chinese electric vehicle manufacturers flexing their muscles. Beyond that, the company generated incredible growth. In 2019, Li Auto saw revenue of $41 million. But in the pandemic-disrupted year of 2020, the upstart enterprise sent a shot across the bow with sales of $1.45 billion.
Nio (NYSE: NIO)
Quickly becoming one of China’s flagship enterprises, Nio took its design and strategy cues from Tesla. By developing the Nio EP9, the company proved that Chinese automakers — which previously never enjoyed a strong reputation for building cars — can hang with the best of them. The company introduced a range of models that fit a wide pricing spectrum. Because of its desirability and accessibility, NIO currently commands a market cap of nearly $20 billion.
Nikola (NASDAQ: NKLA)
An interesting inclusion among EV debutantes, Nikola is basically the anti-Tesla. Throughout its marketing campaign, Nikola goaded Tesla into a war of words on social media. Unfortunately for the upstart, a short-selling research firm accused the organization of multiple business improprieties. Nevertheless, NKLA stock gained a cult following, possibly providing upside opportunities for speculators.
Workhorse Group (NASDAQ: WKHS)
One of the most discussed EV competitors, Workhorse was the only all-electric platform bid competing for the contract to replace the U.S. Postal Service’s aging fleet of mail-carrier vehicles. Though it seemed a no-brainer at the time, the USPS eventually awarded the multibillion-dollar deal to Oshkosh Corp. (NYSE: OSK), a defense contractor. Still, speculators are holding out hope that Workhorse’s legal complaint can generate some traction.
Tesla Stock Forecast
Tesla is the eighth largest company by market capitalization. This stock has proven it can provide high returns within short periods. Considering a tumultuous market, many investors are wondering about Tesla’s stock trajectory.
Current economic conditions seem bleak, yet several experts are optimistic about Tesla’s stock. Some experts have a gloomy outlook for this EV manufacturer’s stock.
The market’s uncertainty can send stocks in any direction. Several experts have provided recommendations and price predictions for Tesla’s stock.
Tesla Stock’s Performance in 2023
Tesla’s stock performance in 2023 has been significantly better than in 2022. The stock has roared back since the economic downturn investors faced in 2022 and has rallied 124% YTD. The reason for such poor performance over the past couple of years is because of the global economy batting headwinds such as soaring inflation, higher energy costs and geopolitical concerns stemming from the Russian invasion of Ukraine.
The broader market over the past year has shown a few signs of a recovery, hinting that these challenges might be nearing an end.
Tesla tumbled more than 70% in 2022, and while the company has no influence over external factors, the substantial and somewhat crazy bull run during the pandemic has ground to a halt. One aspect that potentially could have been managed better is Musk’s takeover of X, which may have caused a significant part of Tesla's share price decline.
Investors will be hoping the potential refocus on Tesla will help stabilize and improve the stock’s performance in the long run.
China has been a significant factor in Tesla's production; however, the country’s battle with COVID-19 and lockdowns has been ongoing and has hampered production since 2022.
The EV maker continues to face headwinds with Musk’s political decisions, and the combination of internal and external factors has been key in the drop in Tesla’s stock price in 2022, but things seem to be looking up in 2023 and a reversal appears to be in the cards.
Where Will Tesla Stock Be in 2025?
Musk has been heavily scrutinized over a perceived lack of focus on Tesla. Therefore, strong leadership is essential to avoid further declines. So, where could Tesla stock be in 2025?
Looking forward, the stock has yet to escape constant external headwinds. Supply chain challenges linger for automakers, and historically high inflation is expected to reduce customer spending on household goods and vehicles.
Bears took over in 2022, and difficulties for Tesla were unlikely to disappear in the near term. Competition among EV manufacturers also continues to increase each year, although Tesla remains dominant across the U.S. market.
Global demand remains a big question for the firm, especially with supply chain issues across China. If Tesla wants to reach its previous highs and continue its rapid growth, a change in the current macro environment is probably essential.
Investors doubt Tesla’s potential stock price growth over the next year. However, many of the problems remaining are external, and future earnings depend on the global economic climate.
It is likely that EV sales will be impacted by a weak economy. But higher interest rates and a declining economy will not continue forever. Tesla could take action to drive demand for its products.
Many predict further price cuts and discounts for Tesla in 2023. While this action may reduce profit, it will likely drive sales, potentially encouraging EV adoption and hopefully pushing its stock higher. Tesla remains one of the most profitable EV makers because of its significantly high vehicle sales prices.
Despite short-term headwinds, long-term growth is still in sight, and another factor that should help stabilize its share price is Musk’s pledge not to sell more Tesla stock through 2025. Whether investors believe him is another question.
A legitimate question exists as to whether Tesla is overvalued, even after the significant decline.
Morgan Stanley analyst Adam Jonas notes that Tesla shed $600 billion in market value in just three months. With Tesla as an ambassador for EVs, the significant valuation decline “raises questions for investment returns” across the sector.
Tesla price cuts have begun in China, and Jonas expects this process to continue in the U.S. and Europe. Even so, the analyst, a Tesla bull, views the significant pullback from the all time high in its shares as a buying opportunity for investors.
It could take months before Tesla shares show signs of a recovery, and while a substantial run for the all time hight once again is not out of the question over the next few years, it is still questionable, given these concerns.
Innovative Growth Potential
Tesla Inc. is a promising investment opportunity for those interested in electric vehicles and renewable energy. The company's innovative history and commitment to sustainability make it a potential for long-term growth. However, investors should consider the stock's volatility, external factors like Musk's decisions, competition and supply chain challenges. While Tesla has shown resilience, careful evaluation and awareness of market dynamics are necessary for assessing its future prospects.
Frequently Asked Questions
Who is Tesla’s biggest competitor?
In terms of direct competition, Nio has a massive foothold in China, the world’s largest automotive market. Additionally, Lucid Motors can potentially challenge Tesla in the luxury EV space. Finally, legacy auto behemoths Toyota and Nissan offer hybrid and plug-in vehicles.
What stock is similar to Tesla?
While it’s challenging to come up with a direct comparison, Ford presents worrying obstacles for Tesla stakeholders. Primarily, Ford moved into the electric SUV market with its Mustang Mach-E. Its F-150 Lightning electric truck could prove popular with the consumer base thanks to its zero-emissions profile attached to an attractive chassis.
Is Tesla stock predicted to go up?
It is difficult to predict the future movement of any stock, including Tesla. Stock prices are influenced by a wide range of factors, including market conditions, company performance, and investor sentiment. It is important to conduct thorough research and analysis before making any investment decisions.
What is Tesla’s stock prediction for 2025?
Some analysts believe that Tesla’s stock price in 2025 will be $300. Using the current price of $238, the prediction represents a value increase of 80%.