How To Buy Tesla Stock
Welcome to Trading Brokers step by step guide to buying Tesla stock. Here you will find an easy to understand explanation of trading Tesla stock. This includes how to buy Tesla shares online, what you need to trade Tesla stock and how to open a trading account with a stock broker so that you can buy Tesla stock online today.
Maybe you have heard of buying Tesla stock online or through a friend. Perhaps you are looking to trade and are curious about the different options available to you. Whether you are looking to speculate, invest or just learn more, this guide on how to buy Tesla shares can help you along your journey.
Overview of Tesla
Tesla Inc. (NASDAQ: TSLA) manufactures electric vehicles and clean energy products, ranging from electric cars, solar panels, battery energy storage, etc. In July 2003, two engineers – Marc Tarpenning and Martin Eberhard – founded Tesla Motors Inc., which was later renamed to Tesla Inc. Elon Musk, the CEO of Tesla, joined the company in 2004 and became its co-founder and assumed the position of chairman of the board.
The company’s electric vehicle marketing strategy was to, initially, manufacture high-priced, low-volume cars, targeting affluent customers. In 2006, Tesla launched its first electric sports car, the Tesla Roadster, priced at $110,000 and about 2,400 units of which were sold. Subsequently, the company launched electric vehicles, Model S sedan and Model X midsize SUVs, for the luxury market and got an overwhelming response from customers with record sales. The company recently unveiled prototypes of Tesla Semi and Cybertruck.
Vehicle services business
Tesla provides a range of after-sale services to its customers, allowing it to make additional revenue from the infrastructure it developed for vehicle servicing and recharging. In addition, the company also offers insurance and software upgrades to its customers, unlike some other automotive companies.
Battery & solar product business
The company also manufactures solar energy lithium-ion storage products — Powerwall (for home use) and Powerpack (for industrial use). Within the first week of the launch of Powerwall and Powerpack, Tesla received orders worth $800 million combined for both products. Moreover, the company also manufactures solar panels and solar roof tiles, which, the company promises, will provide energy at $1.49 per watt, the lowest in America.
Investing in Tesla
Investing in Tesla stock is when you buy Tesla shares to own them outright, usually with a view to holding them for the long term. Investors would usually look to buy Tesla stock in order to try and make a profit when the Tesla stock price increases in value. Tesla’s earnings per share are forecast to grow 261% over the next year (2021).
Trading Tesla stock
Trading Tesla stock is when a trader speculates on the movement in the Tesla stock price without actually owning the shares in Tesla. Traders tend to buy and sell Tesla stock on a more frequent basis, usually speculating on daily, weekly or monthly price fluctuations.
You can buy and sell Tesla stock online through various methods including spot markets, futures contracts, options contracts, spread bets, CFDs (contracts for differences) and ETFs (exchange-traded funds).
One of the most popular ways to trade Tesla stock is via CFDs (contracts for differences). When trading Tesla CFDs, you do not actually invest in Tesla shares, meaning you are not tied to them. You are only speculating on the rise or fall of the Tesla stock price. A CFD is a financial contract, typically between a broker and a trader, where one party agrees to pay the other the difference in the value of a security, between the opening and closing of the trade.
A CFD trader can go short or long, set stop and limit losses and apply trading scenarios that align with their own personal objectives. Traders would open long (buy) positions, if they think the stock price of Tesla will rise or short (sell) positions if they thought that the Tesla stock price will fall. The difference in price between the entry and exit price is the traders realised profit or loss, excluding any broker commission and fees.
For example, if you think Tesla shares are going to increase in price, you could buy a share CFD on the company. You will exchange the difference in price between when your position is opened and when it is closed, earning a profit if the shares increase in price and making a loss if they decrease in price.
On the contrary, if you think Tesla shares are going to decrease in price, you could sell a share CFD on the company. You will still exchange the difference in price between when your position is opened and when it is closed, earning a profit if the shares decrease in price and making a loss if they increase in price.
Futures contracts are an agreement to buy or sell a specified asset at a certain date and price. Tesla investors can use futures trading to speculate on the price movement of Tesla stock in order to try and make a profit. Traders would look to go long (buy) a futures contract if they believe the price will rise or short (sell) a futures contract if they believe the price will fall. The difference in price between the price at the start and expiry date of the futures contract is the profit or loss from the contract.
Tesla spread betting
Spread betting is a financial derivative that enables traders to speculate on Tesla stock falling or rising without taking ownership of the underlying asset. If the trader makes a correct prediction and the asset does move in that direction, they could make a profit, minus any broker fees. On the other hand, if the price moves against their prediction, they would incur a loss.
Financial spread betting is similar in ways to CFD trading except that you are betting a fixed amount per point on the Tesla stock price movement (either up or down) and then pay or receive the difference between the opening and closing price of the bet.
Tesla options are financial instruments that are derivatives based on the value of Tesla’s stock. Traders usually enter into calls when they expect the price of the underlying asset to increase, and puts when they expect the price to decrease. Option contracts come with an expiration date before which the holder needs to exercise their option to buy or sell an underlying asset at an agreed-upon price. The stated price on an option is known as the strike price.
Buyers can choose to exercise their calls and puts or not whereas sellers are obligated according to the buyer decision. Therefore, the sellers (writers) can be exposed to more risk than buyers whose losses can be limited to the premium paid for the contract in the instance they do not exercise the contract. On the other hand, sellers could lose more depending on the Tesla market price.
Exchange Traded Funds (ETFs) enable traders to invest in a basket of securities that trade intraday like individual stocks on an exchange, and are typically designed to track the performance of an existing market or group of markets.
Each ETF is usually focused on a specific sector, asset class, or category. ETFs can be commonly used to help diversify an investment portfolio and create a mini-portfolio, or, for the active trader, they can be used to try and take advantage of price movements.
Tesla is included in various ETF’s with shares in the U.S. ETF market. Traders who are interested in trading other companies alongside Tesla, may consider ETFs.
Where to buy Tesla stock?
Stock trades are processed via a stock exchange, where a stock broker represents each investor. The majority of investors will nowadays use an online stock broker to buy and sell stocks through a stock trading platform which will enable them to connect to the stock exchange. You can see a selection of our best stock brokers below with whom you can open an account to trade stocks online.
ASIC, BVI, CBI, FFAJ, FSA, FSCA
Min $100 Deposit
FCA, CFTC, NFA, BaFin, FINMA, ASIC, FMA, MAS, FSA, FSCA, DFSA, JFSA, METI, MAFF
Min $250 Deposit
ASIC, FCA, DFSA, SCB, CySEC, BaFin, CMA
Min $200 Deposit
ASIC, CySEC, IFSC, DFSA
Min $5 Deposit
Why trade Tesla stock?
Trading the stock market has become a popular investment activity for many people, especially with the technology that we have these days making it more accessible than ever. There are a vast number of trading brokers, trading platforms and trading apps available for buying and selling Tesla stock with relative ease. The cost involved to get started makes trading Tesla stock accessible to traders of all experience levels from across the globe.
The availability of leverage has also contributed towards the increase in aspiring traders. Leverage allows traders to hold a position size greater than they would have been able to without it. E.g. An account balance of $1,000, could take a position size of $5,000 with 1:5 leverage. Whilst this can increase potential profits, it also greatly increases risk. It is therefore of the upmost importance that you have a clear understanding of the significant risks involved with online trading, especially when using leveraged positions.
The majority of traders would look to buy and sell Tesla stock to try and earn profit from the variation in Tesla’s stock price. When trading Tesla CFDs you can speculate long and short on prices rising or falling without actually needing to invest in Tesla shares. This can make it a more convenient trading method for anyone who has a trading account with an online broker. Alternatively, long term investors may purchase traditional shares in Tesla’s stock for a more long-term hold.
Buying Tesla stock can also be a way to diversify a trading portfolio and to hedge against shares in other stocks or investments in other asset classes such as forex, commodities, precious metals and cryptocurrencies.
Tesla is an innovative company and has been dominating the electric vehicle market in the US. The company has a huge potential going forward, which is reflected in the continuous rise in its share value. However, there are always some risks associated with an investment in stocks. Therefore, before making your investment decision in Tesla’s stock or any stock for that matter, you should carefully examine the company’s past performance and future forecast based on the historical factors that move the Tesla stock price.
Factors that move the Tesla stock price
Whether you are in for the short, mid or long-term, it is vital you know those factors that can affect Tesla’s stock price. We will look at some of the important factors that you need to consider if you are looking to invest in Tesla stock.
Introduction of new vehicles
Tesla has been introducing innovative and technologically-advanced electric vehicles since 2006 when it launched its first electric vehicle — the Roadster. To put the icing on the cake, the products have been getting massive response from the customers, improving the company’s revenues and tossing its share price upwards.
Sales & popularity of the product
The company’s Model S electric car was the world’s second best-selling car with sales exceeding 250,000 globally in 2018. Tesla sold more than 300,000 units sold of its Model 3 electric car and became the best-selling car for two consecutive years. This is the reason why the company’s stock quintupled in the year 2020.
Other revenue streams
Being a vertically integrated company, Tesla Inc. holds multiple revenue streams: it earns revenue from recharging points, insurance offerings, electricity storage units, solar panels, etc. Growth in these businesses and an increase in revenues will increase the share price of Tesla and vice versa.
Automotive stocks are most affected by the economic conditions: if the economy is booming and customers’ incomes are growing, the automotive sales will increase and vice versa. Research has shown that historically automobile sales are higher when the unemployment rate is lower, whereas the automobile sales drop when the unemployment rate is higher.
Companies vie for continuous improvement and look for ways to outpace their competitors. Any company-specific events like Tesla’s investment in new manufacturing plants, or broadening its business by acquiring smaller companies, etc could propel the share price of Tesla. Therefore, analysts and investors keep themselves updated about the company and invest in it whenever they find any significant event that could impact the share price of a company.
How to trade Tesla stock online?
If you have taken the time to read through the above, you should hopefully have an understanding of how to trade Tesla stock online. Here is a summary of the key steps:
1. Decide if trading Tesla stock is for you
Trading Tesla stock online carries an element of risk and can take more time than other forms of investing. You will need to research the company, manage your positions, follow market news and decide how to react to it. It is important to understand the risks and dedication that comes with trading Tesla stock online.
2. Educate yourself
Before trading Tesla stock, it is imperative to learn as much as possible about investing and trading online. Any mistake could prove to be costly. There is an abundance of free educational materials provided by many online brokers that can help you to improve your trading skills and knowledge.
Most brokerages will also provide a free demo trading account so that you can practice trading Tesla stock online with virtual funds in order to familiarise yourself with the trading platforms and practice your trading strategies until you feel confident enough to open a real trading account.
3. Choose a Tesla stock broker
In order to trade Tesla stock online, you will need a broker account and trading platform to execute your trade positions through to the market. When choosing a broker, there are a few important things to consider such as regulation, commission fees, platforms, tools, education, funding options and customer support.
If you do not have the time to research brokers, you can see a list of our best brokers that we have already prepared to help traders. If you would like to know more, you can also view our detailed guide on how to choose a trading broker.
4. Research Tesla
If you have made it this far then you may be ready to start trading Tesla stock online! The next step is to research Tesla to help increase your knowledge in the company. The best brokers should have this information conveniently displayed for you within their trading platform.
5. Have a trading plan
Some of the most important factors that can help determine Tesla stock trading performance can be the trading plan and discipline. It is important to have a solid trading plan personalised to your own needs that includes the money management and trading strategy that you will use. Most experts and professional traders would try to not let negative emotions such as fear, anger and greed affect their trading strategy.
6. Buy and sell Tesla stock
Once you feel ready to trade Tesla stock online, you can analyse the market to help decide if and when you will place your trades. After placing a trade on Tesla, you will need to keep track of how it performs and manage it according to your trading plan. Some investors will keep hold of Tesla trades for the long-term, whereas traders may buy and sell Tesla stock on a daily basis.
Is trading Tesla stock right for me?
Trading Tesla stock is a popular choice for long-term investors and active traders. It can be suitable for scalping, day trading and swing trading. Traders who would usually trade forex, trade indices, trade commodities, trade cryptocurrency, may look to diversify their portfolio.
However, it is important to understand the significant risks involved with trading Tesla stock online, especially when using leveraged positions. Most experts would suggest trading on a demo account with virtual funds to begin with.
This can be a useful way to familiarise yourself with how to trade Tesla stock and using trading platforms whilst allowing you to practice your trading strategies until you feel confident and produce consistent results. Most stock brokers provide unlimited demo accounts free of charge.
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