Tesla Stocks: Should You Buy and Trade?
Tesla Motors: How It Started
Tesla Inc. was founded by Marc Tarpenning and Martin Eberhard in 2003 as Tesla Motors. The main idea was to produce electric sports cars. Lots of Tesla investors evaluated the company’s approach and put their money in it.
One of them was Elon Musk, who invested more than $30 million. He became Tesla’s chairman in 2004. By 2009, both founders left the company, and Mr. Musk became the CEO.
In 2008, the company created a Roadster sedan. It was the first car that was fully electric and could compete with petrol cars. For years, the company had been developing its car versions.
In 2012, it launched fast-charging facilities for users of Tesla. As the company started focusing not only on cars, it was renamed to Tesla Inc in 2017. In 2018, the company entered the market of solar energy.
Is Tesla a Reliable Investment?
Tesla entered the stock market in 2010. Since June 29, 2010, the company has been listing on the Nasdaq Stock Exchange under the ticker TSLA. Tesla Motors became the first US car manufacturer that entered the stock market since 1956 when Ford Motor Company went public.
Usually, stocks of car producers are stable. If we consider a chart of Tesla shares, we will see they are highly volatile. The company’s stocks strongly depend on the quarterly earnings reports, Musk’s announcements, and products’ releases.
We all know that Twitter is a place of provocative news, tweets, and information that increase market fluctuations. In 2018, the company’s stocks skyrocketed, and the NASDAQ had to halt them after Elon Musk tweeted about the willingness to take Tesla private at $420. The most paradoxical thing is that the information wasn’t confirmed but was released as a tweet.
On May 1, 2020, the stocks plunged after Mr. Musk tweeted he thought they were too high. The shares lost nearly 12% within 30 minutes.
Mr. Musk is a famous Twitter lover. Thus, if you want to succeed in dealing with Tesla shares, subscribe to his Twitter page.
Thus, Tesla stocks are an excellent option for those traders and investors who feel comfortable in highly volatile markets. At the same time, the shares are not expensive. The highest price they have reached was just above $1000.
How to Start Investing in Tesla?
There are two ways to invest in Tesla stocks. You can either trade or buy them via a broker.
Buy Tesla Stocks
Many companies have a direct stock purchase program. Thus, you can buy stocks directly from the company without a broker. However, Tesla doesn’t provide such an option. That’s why you should find a reliable broker that will help you to purchase shares.
To buy Tesla shares, find a reliable broker.
A broker is used to open an account, deposit money, and make a deal. The characteristics of a trustworthy brokerage firm are standard. A broker should charge low fees, provide a modern and convenient platform, and strong signals that will help you make the right decisions.
After you find a reliable stock broker, you will need to follow several steps to become a shareholder of Tesla Inc.
- Open an account and deposit funds.
- To avoid losses, be sure how much money you need to invest. No matter if you are an investor or trader, you should know the rules of money management. There are different useful risk/reward ratios, but the best ones are 1:2 and 1:3. It means your expected profit should exceed the possible risk by at least two or three times.
- Choose the period and number of stocks. The period will determine how long you are ready to invest. The number of shares will directly depend on the amount of money you have.
- The last step is the purchase.
It seems that stock purchase is an easy procedure. Nevertheless, it has both advantages and disadvantages.
|Owner of real shares. For some people, it’s vital to hold real stocks of a big international company.||Delayed profit. Investing aims at long-term rewards. Thus, if you need money immediately, investing is not for you. You can sell stocks whenever you want, but there is the risk that you will either get low rewards or even lose money.|
|Secure the future. When purchasing real stocks, you invest in your future. First, investors buy shares for an extended period. Secondly, long-term investments have lower risks. Thus, investors hedge their funds by investing in stocks.||Lower profit. The profits from stock investing directly depend on the number of stocks you own. Thus, if you don’t have big funds, it’s unlikely you will earn a lot. Moreover, as investing provides lower risks than trading, the gain also reduces.|
|Lower risks. As we have mentioned, if you invest in stocks for an extended period of time, your risks decline.||Professional analysis. Though you deal with stocks while investing and trading, the analysis for stock investing is more complicated as there is no chance to repurchase shares. You need to determine the perfect stocks for long-term investments and the best entry point.|
|Only buy. If we compare investing and trading, when you invest, you can’t sell stocks until you own them. If you trade, you can both buy and sell without owning.|
Tesla Inc. doesn’t pay a dividend to its investors and doesn’t plan to do it soon. Thus, your profit will be based on the rise of the stocks’ value.
CFD trading stands for contract-for-difference. It’s an option to trade stocks when you don’t own them and get rewards on the price difference. CFD trading is much easier than investing.
To trade stock CFD, you also need to apply to a reliable broker and open an account. An outstanding advantage of a CFD broker is that it allows you to trade on a demo account. For example, Libertex has a demo account that fully duplicates the real one but allows you to trade with fake money to learn how the market moves or test a strategy. You won’t get real money as profit, but you will be able to practice trading.
As soon as you check Tesla stocks on the demo account, you can open a real one and deposit funds. Remember about the money management we mentioned above. CFD brokers provide leverage. Thus, you don’t need significant funds to trade stocks.
CFD trading is easier than stock investing.
In the end, you need to choose a timeframe, analyze market conditions of Tesla stocks, and place an order.
Let’s consider the pros and cons of CFD Trading.
|Small funds. A reliable broker provides leverage that allows trading with a small amount of money. Tesla stocks have already reached $1,000 for a share. Thus, if you buy real shares, $100 won’t be enough to get a good profit.||Not real. When trading stocks, you don’t own real shares.|
|Buy and sell. No matter where Tesla stocks move, you can both buy and sell them considering the current market situation.||High risks. The market volatility increases regarding the timeframe. Thus, the smaller timeframe is, the higher volatility is. Also, trading brings higher rewards. Remember the simple rule: high rewards require high risks.|
|Don’t hurry. As the stock market is highly volatile, you need time to evaluate the situation. Even if you miss a good entry point today, you will get a chance to enter the market tomorrow.||Short-term. There are long timeframes, yet traders prefer trading on small ones. It’s unlikely you will keep a trade position for a year. If you have little funds, you won’t be able to survive such high volatility that the stock market can experience.|
|Easiness. To open a trade position, you need to make an analysis. Nevertheless, it’s easier than investing.|
|Fast profit. To get the benefit, you need several minutes if you choose small timeframes.|
Analyze and Forecast
No matter whether you trade or invest, you will need to analyze the market. There are two major types of analysis you can apply. These are technical and fundamental analysis.
Fundamental Analysis of Tesla Shares
Let’s consider factors that are crucial for Tesla stock analysis. At the beginning of the article, we mentioned that Tesla stocks experience significant fluctuations as earnings reports, Musk’s tweets, and products’ success affect their value.
Check Musk’s tweets, Tesla earnings reports, and products’ releases to succeed in fundamental analysis.
- News. If you want to succeed in trading or investing in Tesla stocks, you should follow the news related to the company, and especially Musk’s tweets. Previously, we gave two examples of how his thoughts affected the market conditions.
- Earnings report. As Tesla is not a blue-chip company yet, its value is the subject of market conditions. If the industry or the whole global market survives hard times, the company’s rewards will decrease.
- Financial data. The balance sheet and income state will determine the company’s health.
- Products’ success. Tesla’s products are not always successful. Thus, if you want to predict the stock price, you should check the company’s releases.
Technical Analysis of Tesla Stocks
Technical analysis is based on chart patterns and indicators. If you have ever traded on forex, you know how the indicators work. The stock trading doesn’t differ a lot from the forex one. Thus, you can use such famous technical indicators as Awesome Oscillator, RSI, MACD, Fibonacci Retracements. Also, it’s worth using Volumes.
All you need to do in technical analysis is to learn how the indicators work. Catch the signals and determine the perfect point to buy or sell Tesla stocks.
You can read an analysis of professional analysts if you feel you don’t have enough knowledge to predict market moves. Experts provide both signals and comprehensive analysis, mentioning the current market circumstances. Some brokers offer free analysis for its traders.
How to Reduce Risks Dealing with Tesla Shares
In general, stocks are risky assets, but Tesla stocks bring even more risks to traders and investors. There are several rules that will help you prevent possible losses or at least reduce them while trading Tesla stocks.
- Analyze the market. As we mentioned above, there are several analyses approaches you can use to predict market direction.
- Practice. There is nothing better than practice and learning from your own mistakes. However, to not lose your money, you should open a demo account. Libertex offers this option.
- Choose a trustworthy broker. No matter how well you analyze the market, if your broker is dishonest, you will lose. Check the terms and conditions, a law under which the broker provides its services, and the platform you will use while trading.
To conclude, Tesla stocks suffer high volatility as it is quite a young company compared to its blue-chip counterparts. Thus, if investors or traders want to deal with these shares, they should be careful and follow money management. At the same time, Tesla offers exciting opportunities, especially for traders who are eager to catch sharp market fluctuations. Moreover, the price of stocks is low compared to blue-chip enterprises.
To learn how Tesla stocks move on different timeframes, use a Libertex demo account that reflects the real market conditions, and provides the full range of indicators you can use to predict the direction of Tesla stocks.
Check our answers to the questions that most of the investors ask before investing in Tesla shares.
Is Tesla Stock a Good Investment?
Tesla stocks are a good investment if you are familiar with high market volatility. The value of the shares changes fast. Thus, you should be careful and apply strong risk management rules.
Does Tesla Pay a Dividend?
Tesla Inc. doesn’t pay share dividends and doesn’t plan to do it in the near future.
Tesla Has a Direct Stock Purchase Plan?
Unlike other mammoth companies, Tesla doesn’t provide a direct stock purchase plan. Thus, if you want to invest in its stocks, you need to find a reliable broker.
How to Buy Tesla Stocks?
To buy Tesla stocks, you need to find a brokerage firm and open an account. Also, you can trade stock CFD, which is an easier way to deal with Tesla stocks.
Why to trade with Libertex?
- access to a demo account free of charge
- technical assistance to the operator 5 days a week, from 8 a.m. till 8 p.m. (Central European Standard Time)
- leverage of up to 1:600 for professional сlients
- operate on a platform for any device: Libertex and Metatrader