How to buy Tesla stocks in 2024

1. eToro

eToro was launched in 2007 and has since risen to be the most popular social trading platform with a user base of over 17 million worldwide. The platform makes trading accessible to anyone and anywhere by courting beginners and experts with its rich library of tools and resources. You can read our full eToro review here.

Security and Privacy

eToro is regulated by the Financial Conduct Authority (FCA) and the Cyprus Securities and Exchange Commission (CySEC) and has received its brokerage licenses to operate in Europe, USA, and Australia from several regulatory agencies.

eToro uses standard security features such as SSL encryption and 2FA, thereby protecting users' personal information and funds from a security breach.

Fees and Features

Firstly, eToro is a multi-asset platform, that is, users have access to more than 2,000 financial assets like stocks, ETFs, cryptocurrencies, indices, and more. Another great feature of eToro is the social trading feature which allows you to join and connect with a community of other traders worldwide to shape your trading decisions. The platform also has a CopyTrader feature that allows one to copy the trading strategies of more experienced traders. eToro also offers its users free insurance that protects them in case of insolvency or an event of misconduct.

eToro offers zero commission when you open a long, non-leveraged position on a stock or ETF. However, every withdrawal comes with a $5 fee. The platform also charges an inactivity fee of $10 every month if you don't trade for 12 months.

Pros

• Copy trading feature
• SSL encryption to protect users' information
• Trading is commission-free

Cons

• Limited customer service

2. Capital.com

Capital.com is a multi-asset asset broker launched in 2016. The platform now has over 500,000 registered users with more than $5 billion in volume traded. Capital.com is built to help trading decisions with its Patented AI trade bias detection system. You can read our full Capital.com review here.

Security and Privacy

Capital.com is licensed and regulated by top regulatory bodies such as FCA, ASIC, NBRB, FSA, and CySEC. Users' information is secured and encrypted by Transport Layer Security, and users' funds are stored in a separate account.

Fees & Features

The brokerage's users can access 6100+ market options with CFD trading. It also provides educational materials to make a better trader out of its users. Capital.com also offers educational materials to assist customers in making more informed decisions. Customers can speculate on upward and downward movements in over 3000 markets. In its mobile trading app, the broker offers an AI-powered tool that provides individualized trading insights by utilizing a detection algorithm to uncover various cognitive biases.

Unlike many platforms, Capital.com operates a free service with no hidden charges, and it upholds its transparent fee policy.

Pros

• 24hrs email and chat support
• MetaTrader integration
• Commission-void trading

Cons

• Mostly limited to CFDs

3. Skilling

Skilling is a fast-growing multi-asset broker with awesome trading terms. At its inception in 2016, its main focus was on bond market investment, and since then, it has grown into creating a new model for the stock exchange. In addition, users can trade various financial assets, including CFDs, forex, and cryptocurrencies. You can read our full Skilling review here.

Security and Privacy

Skilling takes the privacy and security of its users' assets very seriously. All information entered into the platform is encrypted, and only authorized personnel can access the information. The platform also uses two-factor authentication to protect its users.

Skilling is regulated by the Cyprus Securities and Exchange Commission (CySEC) and the Financial Conduct Authority (FCA), which means customers can be assured about their assets' security.

Fees and Features

Skilling has four main platforms: Skilling Trader, Skilling cTrader, Skilling MetaTrader 4, and Skilling Copy. Skilling Trader is intended for traders of all skill levels and provides access to all trading analysis tools. Skilling cTrader, on the other hand, is designed for more experienced traders, focusing on order execution and charting capabilities. MetaTrader 4 is a forex and CFD trading platform with a highly customizable interface. Finally, Skilling Copy is a trading platform that allows members to follow or copy the trading strategies of seasoned traders for a fee.

Skilling charges no fees for inactivity, deposits, or withdrawals. However, commissions on FX pairs and Spot Metals are charged on Premium accounts. These fees begin at $30 per million USD traded.

Pros

• Flexibility and ease of use
• Access to Forex, CFDs, among many others
• Excellent customer service
• Highly secured and well regulated

Cons

• Single currency operation
• Not accessible in the US and Canada.

Now let’s get to know Tesla in more detail by exploring its history, strategy, and the way(s) it makes money.

Tesla History

Tesla, Inc. was founded in 2003 (as Tesla Motors) by Martin Eberhard and Marc Tarpenning, with funding mainly from Elon Musk who sold his previous company — PayPal — to Ebay in 2002. Musk took Tesla’s reins as CEO in 2008 and the company started producing its first car in 2009. In 2010, Tesla became the first car company since Ford to launch its initial public offering (IPO) on the USA’s tech-oriented Nasdaq Stock Exchange. Tesla achieved its goal of producing half a million cars in 2020, and in 2021 it announced that it would soon accept Bitcoin as a form of payment for its products — at the same time as it invested US$1.5 billion in the cryptocurrency.

What is Tesla’s Strategy?

Tesla’s strategy has transitioned — and still is transitioning — from producing high price / low volume vehicles to producing lower-price / higher-volume vehicles as it brings down the cost of the batteries that power them. Tesla is vertically integrated, which means it produces everything from components to finished products and even the proprietary charging stations for its cars. It sells cars direct to consumers rather than through a traditional dealer network.

How Does Tesla Make Money? 

Tesla makes money by selling cars and by licensing its technology to other manufacturers for the purpose of “accelerating sustainable energy”. Since Tesla took a big stake in Bitcoin in February 2021, it also stands to make money from any price appreciation of that cryptocurrency.

How Has Tesla Performed in Recent Years?

After bobbing along the bottom for several years (although it might have looked more volatile at the time), the Tesla stock price skyrocketed to rise more than tenfold between December 2019 and January 2021, since when the price has bounced up and down. The question for prospective investors is whether this stellar performance was driven by mere speculation (traders bidding up the price) or by good — and sustainable — business fundamentals.

Unlike technical analysis, which traders use to look for patterns in share price movements, fundamental analysis is what investors use to determine the underlying health and intrinsic value of a company. When you read about fundamental analysis, you’ll see terms such as P/E ratio, revenue, earnings, earnings-per-share, dividend yield, and cash flow. So, let’s look at what those terms mean.

Tesla’s Revenue

In simple terms, a company’s revenue is the amount of money it brings in from the sales of its products or services before any costs have been deducted to arrive at the company’s net earnings (or profits).

Revenues will typically appear as the “top line” of the company’s income statement, and the term “revenue growth” refers to rising sales from year to year (which is a good thing).

Tesla’s Earnings-per-Share

A company’s earnings are the profit it has made during the year once all costs of doing business have been deducted from its revenues. It is what you might call the “bottom line”.

The total earnings are irrelevant to you as a shareholder because you don’t own the whole company, so what you’re interested in is the amount of earnings per share that you hold.

Tesla’s earnings-per-share is calculated as its net profit (minus dividends paid to preferred stockholders) divided by the number of common shares outstanding. The good news is that you don’t have to calculate the EPS yourself because your chosen stockbroker or one of the leading financial websites will have done it for you.

The earnings-per-share figure feeds into the P/E ratio, discussed next.

Tesla’s P/E Ratio

A company’s price-earnings ratio (P/E) is calculated as the price of its shares divided by the earnings-per-share. 

With Tesla’s share price sitting at just over 700 (for example) and its earnings-per-share being 0.64, the P/E ratio would be about 1094. This means that, at the time of writing, investors are willing to pay a whopping $1094 for every dollar the company earns in profits annually. Put another way, it would take Tesla 1094 years to earn enough money to pay back your investment in the company.

A super-high P/E such as this one suggests that the company is overvalued (i.e., not worth the current share price at the time of writing) but that investors think it will make a lot more money in the future (thus justifying the high share price).

Tesla’s Dividend Yield

A company’s earnings are all well and good but they won’t make you rich as an investor unless they’re shared out in the form of dividends. Companies typically pay out a share of their profits twice-yearly as dividends.

If a company pays out annual dividends amounting to 1 cent per share, and if the current share price is one dollar, then the “dividend yield” would be 1%.

You can find a company’s dividend yield alongside the other fundamentals on your stockbroker’s website or one of the leading financial websites, and you can compare the percentage figure with the interest rate you’d get by depositing your money with a bank instead.

Now the bad news. Up to April 2021, Tesla has never paid any dividends to shareholders, so its dividend yield is 0%. However, this lack of a regular income hasn’t stopped some investors from making serious money from Tesla simply by holding its shares while the share price went up.

Tesla’s Cash Flow

One more fundamental metric you might want to know about is a company’s cash flow, which you can typically find in the “financials'' section of the company information on your stockbroker’s or financial information provider’s website. What you’re really interested in is the free cash flow figure.

So, what is free cash flow?

Free cash flow is the amount of money a business has left over after paying all the costs of staying in business, including capital expenses for buildings. So, it’s like the money you have left over to spend each month (or year) after paying your mortgage and other bills.

A company’s free cash flow can be used to fund the company’s expansion, to pay down some of its debt, or to pay out dividends, all of which may be good for you as an investor.

Tesla’s free cash flow position improved from negative $4.1 billion in 2017 to positive $2.7 billion in 2020.

Why Buy Tesla Stocks?

On many fundamental metrics, Tesla might not be considered a good investment. However, this company is what we might call a “growth stock” like Microsoft and Amazon in their early days. These kinds of companies typically don’t make profits or pay dividends at first but they grow to take over the world.

Here are three reasons why you might want to buy Tesla stock:

• It’s an innovative company that continues to disrupt the transportation and clean energy markets
• Its share price has increased a lot and could go even higher
• It provides some exposure to the Bitcoin boom without actually buying or betting on bitcoins

There are at least five things you should consider before buying Tesla stock or any other company stock.

1. Understand the Company 

Make sure you understand the company as a prospective customer and a prospective investor. Some seasoned investors such as Peter Lynch suggest that you should invest in companies you use yourself, but don’t do this at the expense of ignoring the financial fundamentals. A good company whose products you like does not automatically make a good investment.

2. Understand the Basics of Investing

Learn the basics of investing before going all-in. Learn about things like risk management (how to get out if the going gets tough), money management (not committing all your cash at once), and diversification (spreading your risk across several stocks). Some people choose first to “paper trade” in a demo account, but — with no real money on the line — this doesn’t give you a good feel for the psychologically challenging fear or elation you’ll feel when investing with real money.

3. Carefully Choose Your Broker

There are several things you should consider when choosing a broker to trade or invest with, the most important of which is whether they are registered with the financial services regulator in your country. This means that they shouldn’t be able to run away with your money, and you may get some protection under schemes such as the UK’s financial services compensation scheme (FSCS).

Next, you can think about things like the costs of buying and selling shares via the brokerage account, the responsiveness of its customer services staff, the access channels for making investments (web, mobile, telephone), and the range of stocks that can be bought via the broker’s online platform.

Finally, you might think about the technical aspects of trading and investing. Does your prospective broker provide price charts for free, and does it allow you to use advanced order types such as “stop orders” to limit your losses?

4. Decide How Much You Want to Invest

There is one simple rule for successful stock investing: don’t put all your money into a single stock all in one go.

Successful investors practice diversification to spread their risk between several stocks. Rather than investing £50,000 in one stock, it may be better to invest £5,000 in each of ten different stocks. It may also be better to scale into an investment by buying £5,000 worth of shares in a stock and then buying even more shares with an additional £5,000 investment if the price falls in the future, thus lowering your average purchase price compared with going all-in at the start. But beware of throwing good money after bad at a single stock whose share price could fall all the way to zero.

Whatever you do, you should only invest surplus money that you don’t depend on for something else (like paying the rent). And never — ever — borrow money to invest in stocks until you’ve learned about “leverage”.

5. Decide on a Goal for Your Investment

So, you want to invest, but why? Maybe it will be a fun thing to do, pitting your wits against the markets with your spare cash. Maybe you have a more serious long term goal in mind, like building up a college fund or growing your pension pot.

Your motivation for investing will determine your investment timeline and your attitude to risk. If you need to get your invested money back within a year, you’ll probably panic-sell at a loss if the markets crash. But if you can afford to wait it out for 10+ years, you will console yourself with the fact that the markets usually bounce back... eventually.

Keep legendary economist John Maynard Keynes’ advice in mind when deciding on your investment horizon:

“The stock market can remain irrational longer than you can remain solvent.”

Now let’s summarise what you’ve learned from this guide.

Tesla is an innovative company that is disrupting the electric vehicle and clean energy industries. You can buy Tesla stocks via a stockbroker, and you might want to do so if you buy into its “growth” story.

If you’re ready to invest right now, you need to sign up for a stockbroker’s share dealing account, find Tesla in its categorised list of stocks, and place an order to buy at a quoted price or the maximum price you’re willing to pay.

If you’re not ready to invest right now, you can read our other guides like How the Stock Market Works, The Difference Between Fundamental and Technical Analysis, Market Psychology and a lot more on Buy Stocks, and maybe make a start by “paper trading” using a stockbroker’s demo account.