Perhaps no stock on the stock market has generated quite the same amount of buzz as Tesla. With its innovative electric vehicles, ambitious plans to revolutionize the energy industry, and rapid growth, many investors have wondered whether or not Tesla is a good stock to buy. In this article, we’ll take a closer look at Tesla’s past, present and future outlook to help you answer the question ‘is Tesla a good stock to buy?’
What Is Tesla?
Tesla is a company pioneering our shift to a sustainable future. Founded in 2003 by a group of engineers, Tesla set out with a mission to accelerate the world’s shift away from fossil fuels by introducing electric cars.
Tesla produces a range of electric cars (Model S, Model X, Model 3, Model Y, and Roadster), as well as energy generation products and batteries necessary to make eclectic cars tick. Despite the best efforts of critics and short sellers, Tesla has seen tremendous growth in recent years, with increasing revenues and profits, along with a strong increase in its stock price.
Is Tesla a Profitable Company?
Tesla has been profitable since 2020, a year in which it brought in $690 million in net income. Since then, Tesla’s profits have increased dramatically, first to $5.519 million in 2021 and then to $11.19 million in 2022. Here are a few other key findings from Tesla’s financials.
- Like many tech companies, Tesla was running at a loss for the first 10 years since it went public on June 29, 2010.
- Tesla’s profit margin, calculated by dividing the profit by the revenue and multiplying by 100, currently sits at 15%, up from 10% in 2021.
- It’s also encouraging to see Tesla scale back its long-term debt from nearly $7b at the end of 2021 to $3.76b a year later.
- Tesla’s free cash flow grew by over 100% during 2022.
How to Buy Tesla Stock: Choosing the Right Broker
If you believe in Tesla’s vision and are ready to invest in the company, the first step would be to open a brokerage account with a reputable online broker. After setting up your brokerage account, you’ll need to fund your account and set an order to buy Tesla, specifying how many shares you want to buy and the price you are willing to buy it at.
With many brokers available to choose from, TFG offers a simple framework to help select the correct broker for you. Here are some questions to ask before signing up for a broker:
- Is the broker trustworthy? Looking up a broker’s rating on sites like Trustpilot is a great place to start when evaluating the trustworthiness of a broker.
- Does this broker accept my country? Not all brokers have global coverage, and some brokers may be better suited to different countries.
- Is the broker regulated? Regulated companies, those with the correct licenses to allow them to offer financial products, are far more trustworthy than brokers that lack the required licenses to operate.
- How much does this broker charge?
- What payment methods does this broker accept?
To simplify the selection process for you, we’ve included five of our favorite brokers in TFGs Broker’s Guide.
Tesla Stock Predictions 2030: What The Experts Are Saying
At the beginning of 2023, Adam Jonas from Morgan Stanley set a $250 price target on Tesla, calling investors who abandoned the car maker ‘premature.’ At the time, the price of Tesla was hovering around the $108 mark. A month later, Tesla would peak above $200 a share, recording a quick gain for investors.
Tesla’s earnings per share are expected to grow at 34% per year for the next five years. While this is significantly lower than the 85% annual growth over the past five years, it is still incredible for such a mature company.
In 2021, Goldman Sachs analyst Mark Delaney initiated coverage on Tesla with a “Buy” rating and a $780 price target. Delaney cited Tesla’s strong brand and innovation in EVs as key drivers of the company’s growth. Delaney reduced his price target to $205 by January 2023 to reflect the market slump. Nevertheless, Goldman Sachs remains optimistic about Tesla.