How to Buy Tesla Stock

Start trading Tesla stock with Interactive Brokers as your online broker.

Elon Musk and Tesla continue to make a buzz as a leading green auto manufacturer. Whether you agree with Elon’s ideas or not, there’s no denying Tesla is an excellent company with strong growth potential (and a few major flaws).

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. 

With a look at the future of the climate, Tesla has been a fan favorite for environmentally conscious consumers worldwide. Ready to buy Tesla as part of your diversified portfolio? It can present the possibility for long-term high rewards. Read on to learn how to buy Tesla stock this year. 

How to Buy Tesla Stock

Buying Tesla stock is a simple process if you already have a brokerage account. Search for TSLA and select the dollar amount or shares you want to purchase. If not, follow these steps to get started. 

1. Open a Brokerage Account

The signup process for a brokerage account is simple. You’ll need to start by entering your legal name, social security number, legal address, and possible information about income and assets. Then, you’ll be prompted to verify the account, usually with ID verification, and finally, link your bank account.

When choosing a brokerage, look at account minimums, recurring fees and other costs, plus customer reviews, to choose a good option for your needs. Also, remember that you can open various types of accounts within the brokerage, such as an IRA, Roth IRA, or standard brokerage account. 

2. Fund Your Account

Most brokerage accounts offer different funding methods, such as bank transfers or electronic deposits. If you have an existing brokerage account, you could also transfer it over to your new brokerage. Depending on account minimums, this could be a small initial transfer while you get started.

3. Search for Tesla Stock (TSLA)

Once you set up your brokerage account, you can buy Tesla stock at market price or buy a call or put option on it. For simplicity, let’s start with buying Tesla stock at the market price. 

With this option, you’ll go into your brokerage and select buy (often under headings like “trade” or “stocks”). Then, search for TSLA. Tesla stock should come up, listing the current price per share, and depending on your brokerage, other information or historical performance of the stock.

After buying the stock, you can hold onto it indefinitely or until you want to sell it. Note that you should never invest more than you can afford to lose in one stock. Remember to build a diversified portfolio that includes stocks, bonds, mutual funds, ETFs, REITs and other asset classes. You can improve long-term portfolio performance by diversifying your investments and balancing your portfolio for your risk tolerance and investment strategy. 

4. Place Your Order

Once you’ve located Tesla stock, you can consider different orders, such as a market or limit order. A market order will be executed at the current market price as quickly as possible. On the other hand, limit orders, as the name implies, set the maximum or minimum price at which you're willing to buy (or sell). 

You will also need to choose the number of shares or total price. Some stocks only allow you to buy whole shares, while others, such as index funds, allow you to set a price and buy fractional shares. 

In addition, you can consider purchasing a call or put option. With a call option, you get the right, without any obligation, to buy a stock (such as Tesla) at a predefined price on the expiration date. For example, if you expect the stock to drop in price, you could use a call option. 

A put option is the reverse of a call option. You get the right without obligation to sell a stock (such as Tesla) at a predetermined price on the expiration date.

5. Review and Confirm Order

Reviewing your options is essential! Before making any purchase or placing any order, carefully review the details before finalizing the purchase. Depending on your brokerage and when you place the order, the order could be fulfilled in minutes or within 24 hours or more as the markets open.

Managing Your Investment 

Remember that you should never just invest in one stock, even if it seems like an amazing company, like Tesla. Instead, you can use portfolio tools on the brokerage platform to manage your investment portfolio to understand the risk or performance of certain stocks, including tracking Tesla’s stock performance. Investors can also make it a habit to stay updated with financial news or company changes.

When building a portfolio, consider your risk tolerance, time horizon (how long until you want to use the money) and investment goals. Investing information from trusted sources is worth reading to understand diversification across asset classes and companies. 

You can also invest in index funds, mutual funds, exchange-traded funds (ETFs), bonds, bond funds, stocks, real estate investment trusts (REITs) and alternative asset classes.

With all investments, it’s a good idea to monitor the process. For example, with Tesla, check if Tesla stock is overvalued. It can be sometimes, but you may hold the stock long enough to extract value from your holdings. Some people ask themselves, “Should I sell Tesla stock,” because they’re unsure if it can rise any higher or will be overtaken by other EV manufacturers.

Here is an overall checklist when investing:

• Keep your financial goals in mind
• Be prepared to ride out stock market ups and downs
• Aim to keep trading costs as low as possible
• Consider getting financial advice
• Balance risk tolerance
• Look at the overall investment budget
• Consider whether you can afford to lose the money
• Check whether you understand the company you’re investing in
• Does the platform provider offer protections?

With time, you can learn more about risk diversification, fundamental analysis, and technical analysis to improve your analysis techniques. You can also consider various investment apps and learn about ESG investing trends or investing trends and the role stockbrokers or online brokers could play in your investments. 

Factors to Consider Before Investing in Tesla Stock

As with any stock purchase, you must understand the business, its operations, leadership, and market position. From 2020 to 2024, Tesla’s stock prices jumped from $29.53 to $232.07 (as of 31 July 2024), almost eight times the value. 

While Tesla has shown phenomenal growth, it also faces obstacles in the form of recent car crashes (performance issues) and a controversial leader. Tesla’s competition in the EV space is also growing from traditional automobile manufacturers like Honda, Ford, and GM. 

However, Tesla stands apart in the luxury market and benefits from robust collaboration with its supply chain, word-of-mouth marketing, and pricing techniques. 

In terms of financial metrics, as of the end of July 2024, Tesla has a market capitalization (market cap) of $727.22 billion, a PE ratio of 62.55, an EV/sales ratio of 7.27 and an EV/EBITDA ratio of 53.62. The EV/sales ratio is excellent (anything over 3 is very good), while the EV/EBITA ratio is higher than you want to see when an ideal ratio is 10 or less. It has a debt-to-equity ratio of 0.08, which is good. Overall, these numbers show good financial health, with possible room for more growth. 

Tesla’s potential for future growth and expansion is big, but as history has shown, the company needs to continue with strong leadership, address safety issues, and continue to offer exceptional value. 

Any stock presents significant risk and a series of issues could send Tesla tumbling, as we've seen with Boeing, for example, in the past five years. Public perception and investor behavior affect Tesla’s stock. A company with strong finances should be part of a broader portfolio to mitigate risk. 

Finally, Tesla’s environmental, social and governance (ESG) factors are good, although ratings overall need improvement, as EVs do not significantly improve greenhouse gas emissions (they just switch sources). Tesla stands apart in ethical considerations for investors. While it's far from perfect, it does a good job on ESG issues, transparency, and treatment of employees. 

Fees and Taxes

Remember to account for brokerage fees and commissions when planning your investment portfolio. Ideally, choose a trading platform or brokerage with no fees, no monthly fees, and minimal fees. In most cases, up to 0.25% of assets is considered acceptable. 

Also, remember to account for capital gains taxes. Depending on how long you hold a stock, when you sell it, you'll be responsible for paying short-term or long-term capital gains taxes.

Frequently Asked Questions