Tesla recently had beaten the market expectations and reached the fifth quarter of profitability consecutively. In October Tesla Stock was up by 2%. Elon Musk commented that there is a possibility of more than 12 startups within Tesla. But, the main fed of Tesla is its automobile industry. 80% of the company’s total revenue came from automotive sales in the third quarter.
In the last year, Tesla Stock has augmented by more than 400%. And with these numbers, investors are always wondering whether they should buy Tesla Stock or not? Before making the decision it is important to do a background study and measure the pros and cons.
TESLA STOCK: BACKGROUND
Tesla Stock came into the market in 2010 offering 13.3 million shares at a rate of $17. Post a 5 for 1 stock split in late August 2020, Tesla Share is trading at a rate of $435 per stock. This means that if you had bought a Tesla Stock at its debut price, then your return on that investment today will be more than 12,000%. Tesla has a market capitalization of almost $400 billion, and it is the biggest manufacturer of automobiles by value. Tesla is the size of Toyota Motor Corp. (TM), Honda Motor Co. (HMC) and General Motors Co. (GM) combined. Inspired by Tesla, all these companies also started to manufacture their own eco-friendly and electric cars, but they couldn’t surpass the popularity and position of Tesla. Hence, it is the foremost name in the US.
Due to the present situation of the pandemic, there were disturbances in the usual line of production, but still, the company managed to reach its target of delivering 500,000 vehicles. Only during the third quarter, it delivered nearly 140,000 vehicles which led to an increase of 44%. Tesla‘s revenue increased by 39%, their free flow of cash also touched $1.4 billion. As Tesla is continuously developing its factories across three continents, it’s total expenditures also augmented by 161%. The increase in revenue year over year rose to $8.77 billion. It is well known that Tesla’s inventions are sought after by the world. The Tesla gigafactory in Berlin and the Tesla gigafactory in Texas are under construction and development. Whereas, the one in Shanghai presently manufactures Tesla Model Y. Tesla Semi and Tesla Cybertruck are anticipated ones for 2021 and 2022 and the company is eyeing the factories in Austin and Texas for their productions.
Pros of Buying TESLA STOCK
Tesla Share’s total revenue grew by 39% annually. It soon reached $8.77 billion while Tesla’s share price showed a 105% increase the year before. A Joe Biden victory is to cause the prioritization of green and emission-free vehicles. Biden has a plan to combat climate change by building 500,000 more Electronic Vehicle charging stations on US highways. The Bulls of the Share market invest fully in autonomous vehicles. But, Tesla’s inventions project futuristic, technology-driven tools like cameras and GPS in their vehicles and are committed to the environmental cause. Shareholders, quarter after quarter, have received great profits until now with Tesla Stock. But even with the most profitable giants comes the risk of giant losses.
Undoubtedly, Tesla has grown to become the largest automobile company today. Nevertheless, all investors interested in Tesla share should buy while maintaining a healthy diversified portfolio. Large companies always come with short term and long term risks. Investing in Tesla Stock may not be completely risk-free but can also be worth a lifetime’s fortune given the potential of Tesla inventions.