Tesla Stock: Is Investing in TSLA Stocks A Smart Decision?

The automobile industry is topping the headlines these days. With recent advancements and rumors about mergers and acquisitions, there are a lot of speculations around some of the big names in the market.

Toyota joining hands with Mazda & Suzuki, Mahindra & Ford special alliance are some of the big tie-ups that happened last year. The industry is welcomed globally due to the craze for technology advancements in automobile among youth and adults!

Talking about cars, Tesla is one of those names which is famous and infamous for its reasons. With its aim to tap into the energy vehicle market with its dedicated manufacturing facility, this brand has the potential to capitalize on new opportunities in its existing and new geographies.

Having an idea and executing a plan are two separate things, and Tesla has the potential to fulfill both! Its vision to tap into the market with its leaders and state of the art manufacturing facilities is fascinating!

Tesla is doing its own bit by making the planet Earth a sustainable place to live. With a range of zero-emission electric sports cars, solar panels, and other integrated renewable energy solutions for the residential and commercial sector, Tesla is transforming the world into a clean and superior place to live.

After all, it is wisely said that we haven’t inherited the planet from our ancestors, we have borrowed it from our children!

What is Tesla?

You would have got a fair idea of the motto of American company Tesla. With a current market cap of more than $47.2 Billion, Tesla was founded in 2003 by visionaries named Elon Musk, Martin Eberhard, Marc Tarpenning, & Jeffrey B. Straubel.

The global concerns Tesla aims to accelerate the world’s transition. If you have never heard their name, then probably you are missing out on something huge! Tesla’s first electric sports car, named Roadster, demonstrated that electric vehicles could be sexy, beautiful, and deliver performance.

The car was targeted for the mass market and was embraced by people globally. Tesla’s electric cars are not only known for their mileage and looks but also for their safety. The luxury sedan models of Tesla can go from 0 to 60mph in less than 2.5 seconds!

With huge capacity, panoramic windshields, refined design, touchscreen display, record-setting acceleration, and high towing capacity, Tesla’s cars and marketing strategies have always been the talk of the town! 

Tesla’s journey has been a roller coaster ride in the past few years. The company started at a high note and created a buzz in the market, but due to a few auto production breakdowns and announcements, the investors have lost trust. Tesla’s market value dropped by about half, and the company has seen downhill pretty steadily.

The controversy which started over Twitter made international news, and the stocks slogged. There have been many ups and downs as Elon Musk was sued by the Securities and Exchange Commission (SEC), which further impacted the stock value.

The company is not at its top spot right now, and with all this uncertainty, it becomes difficult to imagine where the other foot of the company will fall. Tesla has a lot of potentials, but it was suppressed because of multiple factors. As they say, nothing falls in place when time is not right!

Is Investing in Tesla a Smart Decision?

Investing in Tesla can be a great deal, especially in the long run, which is what we believe. But with the current ambiguous status, it indeed becomes difficult to take a definitive stand.

Here is what we want you to know before you make any decision to sell Tesla’s stocks or investing your money in the stocks of some other company! Read through this section around trading in Tesla before making any significant decision.

Advantages of Investing in Tesla

The industry is going through a massive transformation, and a short-term view is not an excellent way to assess the future of the industry! Let’s see why you should consider investing in Tesla.

• Innovative idea:

The market works on a very sensitive indicator known as ‘sentiment.’ This sentiment is driven by the company’s intentions and the trust of its shareholders. Globally, Tesla’s motive has been applauded and acknowledged.

This is one reason why investing in Tesla will prove to be lucrative in the long run. The company can potentially be benefitted from the trust of its customers and stakeholders because of its innovative ideas.

The stock of Tesla has touched $387 at one point in time, which shows the potential in the company. It is just a matter of time to wait and vouch for its growth.

• Cost-cutting:

You can call it secret news, but the company is taking ‘hardcore’ steps to cut down on costs. Although cutting down costs is associated with the low performance of the company, it also serves as a good sign for the shareholders. Implementing a stringent policy for cutting down costs shows that the company wants to revive!

The company is built up by the confidence of its stakeholders, and the following cost-cutting will gain the lost confidence and trust. In other words, the shares of the company will show positive movement in the future.

The company is already low on its advertising cost. Anything and everything posted by Elon Musk on its Twitter account form part of international headlines! Hence, the company doesn’t have to spend much on its advertising. A simple tweet by Elon about the advancements is enough to create the buzz in the market.

• Great reputation and loyal customers:

Tesla has been rewarded and acknowledged by various forums because of its ideas and marketing strategies. The world is short on fossil fuels, and thus, the concept behind tapping renewable resources for fulfilling the necessities and luxuries is insanely appreciated.

Besides this, Tesla’s loyal customers are its foundation! As per the recent survey was done on Tesla’s existing customers, 91% of them said that they would purchase the same vehicle if they have to do it all over again.

The loyalty of customers is enough to uplift the company from its lowest phase!

• Talented Workforce:

Tesla is located in Silicon Valley and has access to the most talented engineers in the world.

Tesla’s employees are not only compensated grandly but are also motivated by the fact that everything that they do is helping their mother Earth. They find a sense of purpose by working with Tesla, and thus, the employee turnover rate of Tesla is quite low!

89% of employees of Tesla’s employees feel this, which serves as an excellent motivator for potential employees. With the base of energized employees, the potential of Tesla should not be undermined.

• Focused leaders:

Last but not least, Tesla is a product of masterminds. People like Elon Musk have proved to be great leaders as they initiated many companies and then stepped down and sold it to other investors to start something new!

With their wealth, they could have quickly taken retirement and enjoyed for the rest of their lives on a private island, but they chose to start another empire of success. The variety of products offered by Tesla is one of its kind!

One company offering so many innovative variants is a rare thing to see! If leaders are financially motivated, then such companies which are acknowledged by States for its contribution towards the environment is worth investing!

Disadvantages of Investing in Tesla

There are ample benefits in investing your stake in Tesla, but there are a few disadvantages that can be predicted at this point.

• Slowing Economy:

The economy is slowing down, and thus, it is dicey to invest in a global firm. For instance, due to uncertainty in the China market, the sales revenue was almost half of the forecasted value. When the customers are universal, the risks associated are also huge.

• Burning cash:

Tesla is burning money furiously. This is one of the concerns raised by its stakeholders as the cash profits of the company combined with other liquid assets can only last for the next 12 months as per the 2019 Q1 results.

Raising new capital to cover the cash burn rate is not a good sign for the financial position of the company. As a result, the return on equity will substantially decrease.

Conclusion

There is no doubt that there are disadvantages associated with Tesla stocks. But if you are one of those investors who believe in looking at the big picture, then this stock can help you in increasing your wealth. It might take time for this share price to plunge from its current rate of $185, but given the potential, it is worth considering.

In favor of the company, it has been ranked among the top 200 as best employer for both males and females. In 2018, it bragged spot #4 in the list of most innovative companies. The company which invests in its people and follows the path to achieving its goal can always be trusted with investment!

Those who had invested in this company in 2010 have earned ten times their investment. With leaders like Elon Musk and the company’s customer-centric direction, the company’s long term performance will be massive!