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Should I buy Tesla stock?

Should I buy Tesla stock?

Hello all,

I am considering dabbling in Tesla stock and buying a few shares of TSLA. I'm not looking to put my retirement money into Tesla or anything like that, just a few hundred dollars. However, I would also like to not lose all of the money I put in. Does anybody have a recommendation on whether it is a good/bad time to buy TSLA? I'm currently planning to try to get in before the earnings report on Wednesday, when we would hopefully see another jump like last quarter.

nwdiver93 | August 5, 2013

I do own some TSLA stock but I also sold about half ~$80. It's currently very risky. From what I gather from some of the analysts is that Tesla is trading on where the company will be in ~2017. Much of it's current value is dependent on Teslas' ability to keep Gen III promises.

Con: I love Tesla but a car company worth $14B that sells <30000 cars per year?

Pro: The global value of all car companies is ~$700B... so Tesla only needs to be able to capture 10% to be worth $70B...

Brian H | August 5, 2013

nwd;
And today it hit $144. How smart does your $80 sale feel now?

nwdiver93 | August 5, 2013

Playing with house money now... not sorry for taking a profit :)

TeslaRocks | August 8, 2013

Regret can cause costly decisions, in investing. If selling at $80 seemed like a good idea at the time, it shouldn't matter what the market says after, it was still a good move even without the extra validation from Mr. Market.

That being said, I'm in similar shoes as the original poster and am struggling to resist the temptation to buy 100 shares at current prices (not that I can really afford it anyways) or in engaging in risky options moves. I have been wanting to be part of Tesla for nearly a year by owning shares, but the short squeeze started before I could find the money to get in. Nevertheless, I'd rather wait patiently, invest elsewhere instead meanwhile, and maybe someday the circumstances will be such that I'll be one of the few willing to pay what's it's then trading at. I wish Tesla all the success in the world, but I also remember that markets are also exposed to recessions, a word the public has probably forgotten since the beginning of the year, and that those can be the friend of the long-term value investor who wishes to own a stock forever (as opposed to a trader who only cares about today and couldn't care less about the company, product, or mission).

To sum it up, I can't give financial advice, but just remember that Tesla is experiencing a short squeeze, which could go much higher, but also means current prices aren't really justified. The last thing I'd want is for any true Tesla believers to get burned if this short squeeze ever stops and the stock price collapses. I know I hate owning a stock I paid too much for, especially when I can only sell it at a loss. Besides, there are plenty more places to invest, just need to turn more rocks over until you find a bug you like.

jman | August 9, 2013

I bought at $40 a share and will hold on for a while. The MS is their FIRST production car, imagine what the stock will be when they roll out the Gen III car, and all those that want an MS but can't afford it WILL be in a line similar to the Apple new phone lines !

Definitely buy, but only what you feel comfortable with. Planning on ordering my MS in May of next year !!

aaronw2 | August 9, 2013

I bought at $35 and wish I bought more stock. I invested $8K in stock rather than pay $12K for a battery replacement in 8 years. I plan to hold for at least a year for capital gains. My Tesla grin returns every time they release their earnings reports.

EvaP | August 9, 2013

I am toying with the idea of selling now and buying back later.... There is not much that could make the stock price go up until the next earning. Or is there?

And the truth is that it is pretty high as it is now. It would be nice to sell and buy back more for less....

I made about 40% so far. I got in the game late.

TeslaRocks | August 12, 2013

EvaP, if you bought at a high price, this could be a good strategy. However, if you paid very little (relatively speaking, so let's say $30 or less or even $50 or less), don't forget that it might make more sense to keep holding, if you're planning to hold forever anyways, to avoid paying capital gain tax now on this. I once read something Warren Buffet had written about how much deferred capital gain taxes makes of a difference over the long term, something like 25% versus 10% if my memory is vaguely accurate. That's why I hate paying too much for a stock, even if the price never comes back down: it's not as tax-efficient as paying little and holding it forever as it grows.

EvaP | August 13, 2013

@TeslaRocks, thanks for your input. I am relatively new to investing, so I haven't thought of that.
I guess, I will hang on to it now that Elon is getting all the free advertising with his Hyperloop. I am sure it makes many people look up who he is and what he does and will help the stock price.

TeslaRocks | August 13, 2013

Don't worry about the stock price. It just means what those currently trading it are willing to pay or get for it. What is it worth to you, and based on that, are you comfortable with current price? I usually like to buy additional shares for lower and lower price, so in that perspective, falling stock price is not necessarily bad, as long as you still believe in the company and that in the long run it will prevail. Good luck.

I wanted to buy Tesla shares, but they ran away from me. I'm not one to chase the herd, I prefer to ambush.

orthophonist | August 13, 2013

If you purchase a stock, decide up front how much risk you can support, then put in a stop loss order for half the number of shares you have purchased. The stop loss order should be the amount you are willing to lose. But don't put the whole number of shares, because if you are stopped out and the price recovers, you will regret not holding on to some portion of it. Then set a stop for the risk you will tolerate for the remainder. You will likely not stop, but you never know.

If you have a long view and you have 100 shares, you can consider selling out-of-the money options (look this up if you are not familiar with it). With a stock like Tesla, you run the risk of being called away, but the premium will make it worth while in most instances. Under no circumstances should you consider buying options - that's most frequently a losing proposition.

Best position is to have the long view (5 years or more) grit your teeth and hold on. Most money is made with the long view.

risingsun | August 13, 2013

Other car companies and slow and mired in dysfunctional culture. Tesla has an awesome brand, an awesome CEO and an awesome car. Ford, Chrysler and GM don't stand a chance. He is bringing Silicon Valley entrepreneurship to an industry that badly needs it.

patientv | August 15, 2013

Ryan & anyone else wondering,

You should honestly research ANY company you want to buy stock in and then ask yourself;
1. Do I believe in the company goals, efforts and direction?
2. Do I feel that any reasonable person would as well?
3. Do I feel the goals/product are realistic, achievable and valuable?
4. Do I understand, that when I invest XX amount of dollars in this company, I understand that I am handing over this money without expectation of a finite result?

If the answer is yes to those questions then you should be confident in your purchase.

My opinion, (taken with a grain of salt) is that most of the investors, especially those of us on the forum, like Telsa because it's doing what we want to do but can not do by ourselves. This is why we know it will be successful. We definitely arent going to talk it down...

On top of that, there is no perfect time to buy. I kicked myself when I bought at $40 because I had my finger on the button at $29... I kicked myself when it hit $84 because I should have bought MORE at $40... I'm kicking myself now because I'm debating at $142....when two weeks ago it was $129 and I hesitated. If it all went away I'd still be happy because I believe in the product.

If you have risk concerns perhaps look at something like Solar City which has a lower stock price but has very similar ambitions as it may be a better option. This way you can buy confidently but not invest so much that you are wondering about the loss.

Regardless, I seriously doubt anyone here will ever say it's a "BAD" time to buy Tesla....

Brian H | August 15, 2013

patientv
Heh. Lots of people say it's a BAD time to buy Tesla. Always!

Buying stock, aside from during an IPO, is not directly investing in a company. The money goes to the previous shareholder. You are supporting the share price and can vote for the BoD, etc., of course.

TM sold shares and convertibles at $80, and paid its loan in full and plumped its cash reserves. It conceivably might do so again to kick off GenIII production, I guess. Those are the only times the company directly profits from share price. High valuation permits easier access to borrowing, of course.

TeslaRocks | August 19, 2013

Well put, patientv; I think that for me, investing is mostly about the possibility to accomplish something I believe in, ultimately, or at least contribute to it. The numbers don't mean much to me, other than the ability to participate and contribute more... as opposed to spend on myself or anyone's luxury.

I suppose you mean call options, orthophonist. I would caution against selling call options, based on my experience, as with a stock with Tesla you might end up regretting choosing the meager premium over the continued capital appreciation if your shares are called. Keep in my that holding on to your gains for as long as possible, except if the shares are blatantly overpriced or that you no longer like the company, is a great strategy because it allows to delay having to pay the taxman for his portion of the capital gain. The only call options that might be worth selling are short term (less than 1 or 2 months to expiry), much above current price, and at key moments only (make sure no earnings will be reported before expiry). But you'll get pennies if you can even find a buyer, which makes it hardly worth your time. No, I think buy and hold is the best strategy, as long as you are perfectly comfortable with the price you pay. It's like when you buy groceries in rather large quantity: you plan to eat it, you expect it to remain fresh until you do, you hopefully don't feel like you got ripped off, but either way you have no intention of returning them to the store or reselling them to some poor fool if things don't turn out the way you had hoped.

And I thought that would be a short post.

Kma6 | August 20, 2013

Bought 600 shares a year and a half ago, was able to hold them though ups and downs with the help of selling options against my shares(puts and calls). Bought few more hundred shares at 100, and 150. Plan on holding all shares as long as I kept believing TSLA will keep its current growth rate. EPS valuation doesn't matter to this stock since the Company is still at it's early growth stage, look at NFLX as an example.

With stocks and options, I am holding the equivalent of about 1900 to 2000 shares as long term investment. I am a full time option trader, but I am not rich like most of the Model S owners here.

Hoping I will be able to buy the Model X when it comes out.

transam | August 20, 2013

Well, I only have 13 shares because that's all I can afford right now. My theory behind buying their stock is, even though Americans will be slow at realizing the advantages of electric cars and are addicted to gas cars. I was too but I'm tired of wasting so much money on gas. Now, even if the US economy falls apart., many other countries will buy Teslas. At least half are not sold in the US.
When Tesla offers a lower priced model I will buy one. If I could afford to buy one now, I would. I'm a long time American, gas hog, muscle car builder/driver. I am one of those people who seem least likely to want an electric vehicle. I'm looking at the end, of life, now. I want to keep all that money I'm throwing away on gas.
I love the way Teslas look, i think they are well built and I believe Mr. Musk is a great leader for the company.

Lego | August 21, 2013

As much as I love Tesla and Elon Musk, I would not buy Tesla stock right now. An article I read recently sums it up for me. " If BMW AG were valued like Tesla, the company would be worth about $725-billion. "

Favguy | August 21, 2013

@Lego,

I understand your point of view, but I've been getting told not to buy this stock since I put ALL of my retirement fund into it just over 1 year ago. Everyone told me I was mad to do this, but my retirement pot was modest and well behind where it needed to be, so I thought "why not". Over 500% growth later, it's transformed my life, and I'm able to bring retirement plans forward at least
10 years. (I do keep a stop loss in force a sensible distance behind the share price now, just in case!)

People are still crying "Don't invest in Tesla!", I reckon there is at least a "10 bagger" return to be had over the next 10 years for those brave enough, so to the OP I'd say as long as you are OK with the risk, go for it!

Here in the UK, almost no one I mention Tesla to has even heard of the company, the few that have just think they're a small outfit who make a modest number of electric roadsters, almost no one so far seems to be aware of the Model S!

This story is only just beginning to begin, I love this company, it's products, and its stock. :)

Lego | August 21, 2013

@Favguy

That's because you bought over a year ago, which was around $30. Would you put ALL of your retirement fund into it now?

Most of the replies in this thread bought the stock at half the price or lower, I would bet most, if not all, of you won't buy the stock now. No matter how you look at the growth of Tesla, it's way over valued.

Kma6 | August 21, 2013

@Lego

Just bought 100 shares at about $100 per share, and another 300 shares at about $150 per share. Total long term position is equivalent to about 2000 shares at current price, also holding about 400 shares equivalent of options in my girlfriend's account for her.

If I had no faith in the Company or the stock, I would have cashed out already.

I can't predict the future, but since the reason of my initial investment in this Company was because I see electric cars as the future for the auto industry, and Elon Musk as one of the few true visionaries, if not the only one, of this century, unless something changes that, I will keep increasing my investments in the Company.

JZ13 | August 21, 2013

@Lego - I started buying it last November and I've been buying all the way up until this month. I am liquidating other assets and will continue to buy the stock at this or even higher prices. I see this as a long-term play held out over several years.

The comparison to BMW is ridiculous. You can't compare apples and oranges. BMWs growth prospects are very very slow. Which is why they trade at such a low multiple. Teslas growth over the next several years will be astronomically higher. So you can't compare the P/E ratios of the two companies. That would be like comparing Walmarts P/E ratio to Amazons P/E ratio. The two companies have drastically different growth opportunities.

Lego | August 22, 2013

Good for you guys for believing in Tesla so much. Again, as much as I love Tesla, I have a really hard time seeing the valuation for something that's at least 3 years away.

JoeNJ | August 22, 2013

Full Disclosure: I am a complete amateur when it comes to investing. I'm not in the finance field, have no finance education, and don't really know what I'm doing.

-----------------

I look at the decision to buy Tesla stock in this manner.

Point 1: Tesla is what the world has been waiting for ever since the oil embargoes of the 1970s. It's car technology that doesn't need gas, oil changes, etc. You just need an electrical outlet. It was inevitable that cars would transition away from the combustion engine. Telsa is the company that made it a reality.

Point 2: Elon Musk is a visionary. Steve Jobs was a visionary. Tesla was around $30 a share before their product was brought to mainstream attention. When Steve Jobs returned to Apple, Apple was about $30 a share when the iPod was brought to mainstream attention. I see a lot of parallels between Tesla and Apple. Would you have bought Apple at (Tesla's current price) of $153.00 if you knew it would be $500/share today? Of course there is no guarantee, but I see a lot of parallels between the two companies and the two founders.

Point 3: Do you want to invest or do you want to trade? If you want to invest, holding the stock for a long period of time (until retirement, for example), then I think that it's definitely worth buying, since I personally believe Tesla/Elon will revolutionize the car industry the same way Apple/Steve Jobs revolutionized the music player industry, the movie industry (Pixar), the cell phone industry, and the media purchase industry (iTues). If you want to trade, wait for those inevitable days where the stock will drop $7 a share to buy, and sell when it goes back up in a few days. If you watch the market as a whole over the last few months, this cycle constantly repeats. I have no facts, but I believe these cycles are where the rich get richer, as opposed to them buying at $2.00 and selling at $100.00.

I bought 16 shares of Tesla at $119 in my wife's IRA, and I plan on holding until retirement - or passing along to our child if the cash isn't needed at retirement. As dividends from other stocks hit the IRA, I'll wait for those -$7/share days to buy more.

Brian H | August 22, 2013

Strange trading day. Almost $5 jump at 11a.m., then no trading from 2-3:30, then another $3.50 jump just before close! WUWT?

Iowa92x | August 22, 2013

Nasdaq outage is why no afternoon trading. Price bump is due to delayed "people getting it" with the positive test crash results.

Tesluthian | August 22, 2013

CNBC ran at least four video clips about Tesla today on various topics, interview at the factory of Elon etc. and everyone was already tuning into CNBC because of the Nasdaq Freeze.

patientv | August 23, 2013

@Brian H thanks for the stock explanation & clarification. My thoughts were on a simple explanation on how I determine a purchase. It helps me feel more secure , if that makes sense which is what I felt Ryan may have needed to determine if he or others wanted to buy. Maybe I shouldn't have said it that way but essentially that's how I make my determination.

@Lego I think you have the right mentality especially for short term gains. And it's good to express it to keep the rest of us, Tesla fairy dusters in check.

My personal belief is that most people in the forum are lifers . We are the people believing in the unforeseeable and accepting the consequences, which is why I feel it would be hard to find many doubters here. It's also why I press for anyone to research because I read the negatives too and believe the assessments are valid BUT I also believe Tesla is ahead of the game, got the right direction, culture and leadership that even with a drop, it will recuperate and grow. I feel like done right, Tesla could be the game changer and my money's in it for the long ride. I don't want GM going out of business but I would like to see them ordering Teslas powertrain or placing an order for 40,000 battery packs..lol. And when I bought my mentality was I'm buying in hopes of the day when electric cars are the norm and gas cars are the novelty.

Brian H | August 23, 2013

patientv;
Just a side comment: GM DID go out of business, and were turned into Government Motors by Admin fiat. John Tamny and other classical economists hold that the economy would have been far better off to let its assets be distributed under bankruptcy into the hands of those not proven incompetent like the current holders.

jstack6 | August 24, 2013

Even at $160 today in Aug 2013 it's a strong buy.

More SuperChargers everyday, all FREE,
Tesla X coming soon.

Tesla C and or E coming in a year or 2.

Tesla batteries used for Solar battery back up.

Tesla makes the Toyota RAV4 electric

and on and on

Thegator1 | August 26, 2013

I started investing in Tesla when the stock was $38. Approximately 6 months ago, my initial investment was a little over 10K. When you have a growth company like Tesla the best way to invest is through call options. My account value now is well over 300k. There were days of being up 50k and being down 40K, but you need to have the conviction and support in what you believe in. I now own stock and calls. Good luck in investing with Tesla

johngratcliff | August 26, 2013

Cramer's evolution is interesting. See his explanation on CNBC of currently high stock price. Pretty solid assessment although he can be annoying.

I am not sure how to insert the address so copy and paste: http://www.cnbc.com/id/100989171?__source=yahoo%7Cfinance%7Cheadline%7Ch...

johngratcliff | August 26, 2013

Actually I seem to have known what to do to insert the address after all.

dutchstew | August 27, 2013

A correction is bound to come after the last people get on board when greed is at its most aggressive and the fear of missing out is at its highest. Then wait for a 50% retracement to the last low and get in there.

Brian H | August 27, 2013

Either pasting or HTML works.

ian t.wa.us | August 27, 2013

Hadn't seen that John. Thanks!

bonaire | August 28, 2013

I've been reading the message board on Yahoo for TSLA.

There is a compelling reason to see that the May 2013 time-period Sr. Notes that were issued to pay the DoE loan are at play here. They are due 2018 but convertible to stock IF the stock reaches 161.88 for 20 of the last 30 trading days this quarter. Has been 2 days now and an attempt was made last Friday to break that. If it doesn't hold now, I see a correction either later in Sept or into October.

This appears to be an orchestrated stock increase by a few investment banks and perhaps even Musk's trust itself. But - do your own research. I would not buy TSLA here at these prices. What is the best price to buy? It's what will not lose you money in a correction. There are no dividends. You may want to buy or sell certain options on the stock based on the conditions of the Sr. Notes action.

Thegator1 | August 31, 2013

@bonaire- read on about the warrants. $25 for a share if over $188 I believe by the year 2018. There is also interest being paid

hch | October 3, 2013

can anybody please tell me where do i start to invest in stocks?or how do i start?

JUT0020 | October 3, 2013

HCH, you need to keep your money... Tesla has dropped $20+ in two days.... Id wait till 2014 to invest....

cloroxbb | October 3, 2013

@hch

find financial sites with "guides" on investing. Do a lot of research.

SamanthaMG | October 3, 2013

JoeNJ,
Sage advice. Curious as to your thoughts and what your actions might be now, with the recent drop in share value due to the battery fire, plus the downgrade on the stock. Any more sage advice? Reality is, as much as the stock has plummeted from its high, it's still a high purchase at $175/share (last I looked). Thanks in advance!

EvaP | October 3, 2013

Unfortunately, this is more than just one car on fire. There could be a lawsuit against Tesla.

http://finance.yahoo.com/news/tesla-motors-inc-shareholder-alert-1815001...

My guess is that they will kick Tesla to the ground before it can recover again. It was somehow to expect. Every revolutionary idea gets attacked before it gets accepted.

I don't think it is time to buy Tesla shares YET.

Brian H | October 3, 2013

Your bank may well have a link to a brokerage, and can inform you about credit requirements, etc. Ask there, first.

SamanthaMG | October 3, 2013

EvaP:
I saw that press release that yahoo agreed to publish. *sigh*
To be frank, it's an ambulance chaser of a suit. Ridiculous. And see the comments at the bottom.

Captain_Zap | October 3, 2013

I'm buying. Take everythin else with a grain of salt.

Papafox | October 4, 2013

If you're looking for a short-term investment, this stock is too volatile unless you're really good at playing volatile stocks, buying on the dips, and watching the stock like a hawk.

For long-term investing, I suspect Tesla will work out well for current buyers. The market capitalization is high, but the revenue potential of this company is also very high. I'm in for the long-run.