Should You Invest In Tesla Motors, Inc.?

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27,923,014 Tesla Motors, Inc. positions opened on eToro

Why does Tesla appeal to investors?

Since floating on the Nasdaq stock exchange in 2010 at a price of $17, Tesla’s shares have jumped in value. By continually improving the battery life of its cars, the brand has attempted to ease any lingering doubts among investors regarding their efficiency.

Follow Tesla (NASDAQ: TSLA) publications and financial reports in their Investor Relations Page.

The group’s ongoing appeal to investors can perhaps be explained by the impressive hit rate it’s managed to achieve in a traditionally difficult sector. The Model S alone has enjoyed a rapid rise, becoming one of the planet’s best-selling electric cars.

As with fellow technology innovators Apple and Google, the Tesla brand has become a byword for fresh thinking. But its focus on the long-term technologies of the future has come at a price, with its expansion plans driving up costs. This means the company has often struggled to make a profit.

Because of its commitment to innovation, the company doesn’t pay dividends on its common stock. Its website states: ‘We intend on retaining all future earnings to finance future growth and, therefore, do not anticipate paying any cash dividends in the foreseeable future.’

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Who should include Tesla in their portfolio?
  1. Investors seeking growth opportunities. Tesla’s decision not to pay dividends might make it less appealing to investors seeking income. But by ploughing its earnings back into new products and services, it may appeal to growth investors.

  2. Environmentally-conscious investors. Given that its ultimate goal is to create a more sustainable transport system, the company’s noble aims might prove attractive to those with an eye on the environment.

  3. Day traders seeking to profit from short-term movements in Tesla’s share price.

How to invest in Tesla

Tesla shares trade on the Nasdaq stock exchange in the US – an exchange that traditionally focuses on technology companies. Its shares trade under the ticker symbol ‘TSLA’. Tesla doesn’t run a direct stock purchase programme, but on eToro, Tesla shares can be added to your investment portfolio.

To buy Tesla stock on eToro, follow these steps:

  • On this page, click the “Trade” button.

  • Open a long (BUY) non-leveraged position on TSLA. By doing so, you are investing in the company and own underlying stocks with 0% commission.

  • The TSLA stocks will be added to your investment portfolio.

  • If you choose to do so, you can also apply various mechanisms, such as leverage or opening short (SELL) orders, however, these features do incur nightly and weekend rollover fees and are available only for selected countries.

Which sectors does Tesla focus on?

From small beginnings, Tesla has grown into one of the world’s most recognisable technology brands. With the overarching ambition of accelerating the global transition to sustainable energy, it boasts a broad skillset, overseeing the development of attractively-designed electric vehicles.

The automaker enjoyed an early success in the form of its Roadster sports car, which featured an innovative lithium ion battery. But it was the Model S that really established the firm as a major player in the green technology sector. Launched in 2012 as the world’s first premium electric saloon, the Model S has since gained a string of awards and environmental accolades. Outside the US, China, continental Europe and Canada are among the international markets where it’s found favour.

The company tends to focus on the development of one model at a time. Following the breakthroughs made by the Model S, it’s come up with a luxury SUV called Model X and a compact saloon named Model 3.

What causes Tesla shares to move up and down?

Wall Street appears to be in two minds regarding Tesla, with shares in the company having the potential to quickly move up and down in a reasonably short space of time. The following factors could all have a positive impact on its share price:

  • Growing public demand for electric cars. As drivers become more comfortable with the concept of electric vehicles, their sales continue to climb. Given that it specialises in sustainable transportation, Tesla appears perfectly placed to take advantage of this trend.

  • Its slow and steady approach. Rather than rushing into things, Tesla spends years developing each of its flagship models. This attention to detail suggests the company is keen to get things right first time, instead of hurrying products into the market.

  • Charismatic leadership. Tesla chief executive Elon Musk is a high-profile entrepreneur, whose ability to sell the company’s vision of the future has long attracted investors. With his interests ranging from driverless cars to space travel, he’s kept Tesla firmly in the public eye.

On a less positive note, the following issues may play on the minds of investors:

  • Concerns over production delays. The trouble with being a technology pioneer is that there’s no established template to follow. And that means things don’t always go entirely to plan. Tesla’s products haven’t always been released on time, with its Model X notably experiencing delays. Questions will continue to be asked about the timescales given to its future models.

  • Scrutiny over its financial performance. Tesla has frequently posted losses, despite impressive sales figures. With the group rarely turning a profit, investors may start to question its strategy in the coming years if it continues along this path. The ongoing lack of a dividend might also dampen enthusiasm for its shares in the long run.

  • Safety fears. Despite the long battery life of its cars, Tesla’s trials of semi-autonomous driving systems have at times gained headlines for the wrong reasons. Its attempts to appeal to the mass market may ultimately hinge on whether the public has confidence in the safety of its cars.

*This content is for information and educational purposes only and should not be considered investment advice or an investment recommendation.

*Past performance is not an indication of future results. All trading carries risk. Only risk capital you're prepared to lose.


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