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If you’re looking to invest in solar panels and electric vehicles 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 reduce carbon footprints. It’s also been instrumental in delivering solar-powered homes to people who seek clean and efficient energy for their lifestyles.
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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 UK 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.
How to Buy Tesla Stock
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 stocks, 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 Tesla stock. 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 either buy a Tesla stock at market price or choose to buy a call or a put option on the Tesla stock. If you choose to buy it 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 want 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 in buying a call option and buying a put option, click here.
Step 2: Choose a strike price.
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 $664, you could set a strike price of $650 to buy put options.
In the near future, if Tesla stock value dips below your strike price of $650, you could sell the put options at that time to turn a profit. In this case, if the Tesla stock dipped to $640, 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. Post expiration date the options held by the investor become invalid. The expiration date can be set anywhere between 1 week to 2 months or even 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 advisor to help you decide.
Step 5: Watch stock prices.
The 12-month average price target of Tesla stock is $455 , with a high estimate of $788 and a low estimate of $60, according to the NASDAQ. Based on Tesla’s recent performance in the market, you should give yourself more than 1 week to take advantage of the stock options. While you hold onto Tesla stocks, you can keep a close watch on its day-to-day valuations here.
Cons of Buying Tesla Stock
- Tesla’s infamous CEO Elon Musk has a reputation for being eccentric. From twisted tweets to risky relationships, Musk’s questionable 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.
- Tesla’s daily stock value has been volatile to say the least. In the past few weeks, its stock rapidly fluctuated after recently making an all time high of $695 per share.
- Tesla stocks do not pay dividends to its investors.
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.
- According to a CNBC report, Elon Musk has increased his net worth by $140 billion, due in large part to the 650% rise in TSLA stock. If you had invested $1,700 on 100 shares of TSLA stock during its initial public offering in 2010, you would have made $63,300 profit on the stock at current market prices.
- Tesla is the first automobile company to go public since Ford in 1956. As of March 2020, Tesla is valued at a market capitalization of $627.29 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 always ahead of the curve when it comes to innovation.
- Tesla has shipped more than 139,000 electric vehicles in the third quarter of 2020. Although plans 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 grow in 2021.
- Tesla has been able to deliver a record number of electrical vehicles in the face of a global pandemic and economic recession in 2020.
Choose Your Best Broker
When it comes to investing in stocks, you have a wide variety of brokers to choose from. If you are new to stock trading, you might want to speak to a discount broker or a full-service broker to assist you in your investments. Take your time to evaluate brokers until you feel you can trust them with your wealth.
Brokers are legally bound to put your best interest before their own. However, if you are familiar with stock exchange jargons and trade, you can dive right into it on an online brokerage platform.
There are quite a few out there and Benzinga’s guide to online stock trading brokers is your best bet to find one that’s right for you. Check for commission rates and minimum account requirements before signing up with any brokerage platform.
Tesla as a Trailblazer
To quote Nikola Tesla himself, “Let the future tell the truth. The present is theirs; the future, for which I really worked, is mine.” And as promised, Tesla Inc. has delivered economic, efficient and elegant cars.
A long-term investment in such a competitive company should prove to be profitable, especially if you share Tesla’s commitment to a sustainable future.
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