Will this company’s cutting-edge tech pay out or fail out?
With outbursts from Elon Musk causing widespread speculation about his and Tesla’s future, some investors are backing away from this multinational automotive and energy company. Others, however, are convinced that now is the best time to jump on board.
Tesla’s recent stock performance
Take a look at Tesla’s stock price performance over the past several months. Monitoring market performance is just one aspect of the research you should do before investing in a company like Tesla — past performance is no indication of future results.
Should I buy Tesla stock?
While the company’s innovations are an inspiration to many, others are less impressed. Here are some of the commonly cited pros and cons of Tesla as an investment option:
- Brand power. As mentioned, Tesla is seen by many as an inspirational brand. Elon Musk also pulls in followers with his often brazen antics and eagerness to shoot from the hip.
- Innovation. Tesla set the pace for building attractive electric vehicles capable of traveling long distances on a single charge. It’s hard to argue that the company isn’t forward thinking.
- Diversity. Tesla’s mission to accelerate the world’s transition to sustainable energy also fuels its diverse range of battery-powered products.
- Erratic. Whatever you think of Elon Musk, his Twitter outbursts harm the stability of Tesla, Inc. for investors.
- Missed deadlines. Tesla is notorious for promising deadlines they can’t deliver on.
- Senior staff turnover. Executives are constantly changing, which is not a good indicator of stability or a level company culture.
Tesla’s technical performance
Technical analysis is the mathematical study of a stock’s price based on its recent trends. There are a number of ways to analyze market trends. Here’s a summary of what several key technical indicators are saying about Tesla’s current stock trend, according to charting service TradingView.
Tesla’s financial performance
Explore the table below to see how Tesla has performed financially over the last 3 years.
|Tesla (December 31st figures)||Revenue||Operating income||Net income||Total assets||Total equity||Number of employees|
|2015||4,046,025||716.6 million||888.7 million||8.07 billion||1.08 billion||13,058|
|2016||7,000,132||667.3 million||674.9 million||22.66 billion||4.75 billion||17,782|
|2017||11,758,751||1.63 billion||2.24 billion||28.66 billion||4.24 billion||37,543|
Interest in Tesla over time
Overall interest in Tesla has been slowly climbing, but there are sharp peaks and dropoffs that make some investors nervous.
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Ways to stay up to date with Tesla shares
When buying or selling stock in a company, keep an eye on current affairs related to the company, such as:
- Financial reporting. It’s good practice to know when Tesla will be releasing its financial reports; this will let you know how the company is performing and will have a big impact on the stock price. Tesla reports annually on December 31st, as well as quarterly throughout the year.
- Company news. Is Tesla planning to release a new car model in the next few months? Is it looking to move into a new country or market? Has Elon Musk done anything controversial? These types of events will have an impact on the share price of Tesla.
- Wider news. Be aware of other external events and news that may have an impact on Tesla’s stock price, such as gas or electricity prices.
- Does the company pay dividends? If a company pays dividends, they pay some of their profits back to shareholders. Currently, Tesla does not pay dividends on their shares.
- Shareholder meetings. These are often held annually and invite large shareholders to attend meetings and vote on matters relating to the company. It’s a good idea to know when these are, as they may speak to the direction of the company.
Questions to ask before you invest in any company
Before deciding to invest, consider these important questions:
- What does the company do? Make sure you know how a company works and exactly what it does before investing.
- Is it profitable? Take a look at Tesla’s quarterly or annual earnings reports to find out.
- Who are the main competitors? Before investing, figure out whether the company is the market leader, a newcomer, a fast-growing disrupter or getting pushed out of the market. If the company you’re considering investing in operates globally, keep an eye on foreign competition as well.
- Who runs the company? Find out who the senior managers of the company are, as well as the CEO, CFO and board members. If a company’s leadership is constantly shifting, that can be a warning sign that it’s unstable.
- Is the company’s position sustainable? Is the product or service they offer something that will still be valuable in 5, 10, or even 20 years? Trendy companies can work for short-term investments, but if you’re in it for the long haul, make sure the company is sustainable.
- Is there room for future growth? What’s the long-term outlook for company? Has it reached its maximum size?
Tesla’s quirky CEO and inability to hit deadlines indicate that its stocks aren’t exactly low risk. However, its cutting-edge technology and financial performance over the last several years have convinced some investors that it’s a worthwhile risk.
If it’s a risk you’re willing to take, considering investing through your investment or brokerage account.
Frequently asked questions
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