Are you wondering how to buy Tesla stock? Tesla has been in the news a lot recently – and not in a good way. Between Elon Musk’s erratic behavior, SEC investigations, and the company’s financial instability, it can be hard to see through all of this noise to figure out what Tesla is actually up against. So should you invest in Tesla stock? What should you know about Tesla stock before buying? If you’re thinking of investing in Tesla, this article will show you how to buy Tesla stock.
If you’re interested in buying Tesla shares, it can be done entirely online. While you may already be thinking of investing in Tesla stock, this article does not advise you to invest in Tesla stock. We will share how you can buy stock in companies, with Tesla as an example. Investing in Tesla is an investment decision for which you might want to consult your investment advisor. This is not investment advice by any means.
Overview of Tesla
Tesla is an automobile manufacturer headquartered in Palo Alto, California. They make electric cars and their stock is publicly traded on the NASDAQ under “TSLA.” Tesla was founded by Elon Musk in 2003 as a company that designs and manufactures fully electric vehicles. Tesla is one of a few companies paving an entirely new way to design cars with their focus on sustainability through innovation at every level. Tesla went public in 2010, the first American car manufacturer to do so in over 50 years.
Tesla offers a selection of electric vehicles, including the Tesla Model S and X Signature series. Tesla’s car models are designed to be sleek, sexy and sustainable. The company has a long-term goal to provide electric cars for consumer use that are affordable and reliable while also having lower environmental impact than gas powered cars. The current market cap of Tesla is 647.84B.
Tesla’s stock performance in recent years
Tesla’s stock has been one of the world’s top performers in the past five years. In June 2016, TSLA stock was trading at $43.30, and the current price as of June 2021 is $672.03. The company has seen its stock grow by over 1453.52% in five years. The pandemic caused the Tesla stock to dip slightly but it has rebounded quickly and has been on a growth trend since then.
Buying, selling, and trading Tesla shares
Here are the differences between buying, selling, and trading Tesla shares.
Buying Tesla shares: Buying Tesla shares involves finding a broker and placing an order to buy Tesla shares. You would want to buy at a lower price to profit if the stock price goes up.
Selling Tesla shares: If you already hold Tesla stock, you can sell it for a profit if you’d like to. If Tesla’s stock price has increased significantly since you purchased it and if the market conditions look favorable for selling, that is, if you expect the price to drop, you can sell the shares and make a profit. Selling involves finding a broker and placing an order to sell Tesla shares.
Trading Tesla shares: Trading Tesla stock is the same as buying and selling Tesla shares, but it is done over shorter periods. With trading, the goal is to make smaller profits quickly. You also run the risk of making losses rapidly as well. If you’re a new investor, we recommend buying and holding your investments in Tesla for a longer period, i.e., six months to a year or more.
Steps to follow before buying Tesla shares
1. Understand how the stock market works
If you want to invest in Tesla stock, you should understand how the stock market works. You should not panic when stocks go down or buy in a frenzy when stocks trade high.
2. Research Tesla stock
As an investor, it is a good idea to buy stocks in companies that you’re already familiar with and know well. If you are already using a Tesla’s products and trust the Tesla brand, you can buy the shares of Tesla. Before you buy Tesla shares, you should take steps to research the stock and its fundamentals.
You should look at where Tesla gets its revenue from, how its growth looks like, and what its plans are. Most of this information will be available in Tesla’s annual report in the annual letter to shareholders. This letter will share the important updates in the business. The SEC filings of Tesla, conference call transcripts of Tesla, quarterly earnings updates of Tesla, and recent news related to Tesla are good sources of information to analyze the company.
The more analysis you do and the more information you have, you will make more intelligent decisions about investing in Tesla.
3. Examine broader market conditions
You should also look at broader market conditions before you buy Tesla shares. If it is a bull market, the price will go up, and it would make sense to buy Tesla stock immediately. If it is a bear market, the price will go down, and it might be better to wait to buy Tesla stock at a lower price.
How to buy Tesla stock – a step by step guide
Buying Tesla shares is a simple process, even for new investors. If you’re thinking of buying Tesla stock, you must decide whether you want to buy Tesla stock for the short term or the long term. If you’re going to invest in Tesla shares for the short term, you should perform a technical analysis of Tesla stock.
If you want to hold Tesla stock for the longer term, you should perform a fundamental analysis of Tesla. You should also keep yourself updated with news and with developments of Tesla. Here are the steps you need to follow.
1. Select a broker
To buy Tesla shares online, you will need to use an online brokerage platform. You will need to choose a broker that gives you access to NASDAQ, as Tesla is listed here. In general, you should look at the following parameters before selecting a stockbroker.
- Stocks available for trading: The first criteria for selecting the broker is that you should be able to use the broker to trade the stocks you’re interested in.
- Commissions charged: Some brokers charge a higher commission, so if you want to maximize your profits, you would want to choose a broker with lower commissions.
- Account fees: You should also watch out for other fees such as annual fees, inactivity fees, trading platform subscription fees, and fees for research or data. Brokers will also charge a fee for transferring cash or investments or for closing your account. You can avoid many of the fees by choosing a broker that doesn’t charge fees or by opting out of services that cost extra.
- Payment methods: Some brokers are more flexible in their payment methods than others. If you want flexibility in payments, this should be one of your criteria.
- Track record: You should choose a broker based on their track record. The broker that you choose should have a track record of reliability, and they should have been around for a while and have good reviews online.
Our broker reviews can help you select from the best brokers for stock trading. Here are the best stock brokers of 2021.
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2. Open a brokerage account
This is the account in which your Tesla shares will be stored. Opening a brokerage account has become very simple. The steps vary from platform to platform, but you should be good to create your account once you provide your details and some form of identification. Again, the time taken to open an account varies between platforms.
3. Fund your brokerage account
The next step is to log in to your account and deposit money in your brokerage account. Most brokers accept bank and debit card transfers, and some accept transfers through other methods such as Paypal.
4. Decide how many Tesla shares you want to buy
If you’re a new investor, you could start small with a small amount and gradually increase your investment as you get more experienced in the stock market. You can also think about investing in fractional shares, which certain brokers offer. Buying a fractional share means you are purchasing a portion of Tesla stock instead of whole Tesla shares. If the Tesla share is too pricey, you can opt to buy a fractional share of Tesla.
5. Choose your stock order type
All you have to do now is search for the TSLA ticker, specify the number of Tesla shares, choose your order type and click on buy. Once you place your order, your broker will execute the order, and the Tesla shares will be listed in your account.
There are different order types you can place. Let’s look at the most commonly used ones, the market order and the limit order.
The market order instructs your broker to place an order to purchase Tesla stock at the prevailing market price. There are no price parameter restrictions on this order. You should use this order type for stocks that don’t experience wide price swings, generally larger company stocks. Stock prices can vary between seconds.
If a slight price fluctuation does not matter to you, you should place a market order. If you place a market order trade “after hours,” when the markets have closed for the day, your trade will get executed the next day at the prevailing market price.
The limit order instructs your broker to place an order when the Tesla stock reaches a specific price point. It gives you control over the price at which your trade is executed. For example, if a stock is trading at $200, but you value Tesla at $180, the limit order tells your broker to wait till Tesla stock reaches $180. Limit orders are suitable for smaller company stocks that experience wide price swings.
6. Review your position periodically
Once you have purchased Tesla shares, you should monitor the stock according to your investment strategy. You should follow the company’s quarterly and annual results and the news and developments in the company.
Investing always comes with certain risks and Tesla is no different. You can reduce risks by diversifying your portfolio and by avoiding scams by choosing a reliable broker. To recap, you can buy Tesla shares by selecting a broker, opening a brokerage account, depositing money in your brokerage account, placing an order, and reviewing your position periodically.