Experts: 4 Reasons Tesla Is a Good Bet for First-Time Investors (And 4 Reasons It Might Not Be)
Written by
Laura Beck
Edited by
Ashleigh Ray
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So, you’re thinking about dipping your toes into the stock market, and Tesla’s caught your eye? Join the club! Elon Musk’s electric car company has been turning heads faster than a Model S in Ludicrous mode.
But before you jump on the Tesla bandwagon, let’s break down what the experts are saying about whether it’s a smart move for investing newbies. Here are four reasons Tesla is a good bet for first-time investors – and four reasons it might not be.
Reasons Tesla Stock Is Right for First-Time Investors
They’re Kind of a Big Deal
Robert Hodgins, the founder of Sand Hill Road Technologies Fund, pointed out that Tesla isn’t just about cool cars anymore.
“… Tesla’s involvement in areas like energy storage and solar power provides additional avenues for potential growth,” he said.
Elon Musk, Himself
Hodgins gave Musk props for his “bold leadership” that “continues to drive innovation.”
In his opinion, Musk knows how to keep himself – and his companies – in the news.
They’re Getting Better With Money
Hodgins shared, “Tesla’s financials have also improved over time, adding a bit more stability.”
If this trend continues, it will make Tesla a safe bet for a long time to come.
It’s Not Just Cars, It’s the Future
Investing in Tesla is like buying a little piece of tomorrow. You’re betting big on innovative future technologies.
Reasons Tesla Stock Might Not Be Right for First-Time Investors
Hold Onto Your Hat (And Your Wallet)
On the other hand, David Materazzi, the CEO at Galileo FX, warned that Tesla stock can be unpredictable.
“Tesla’s stock price jumps up and down a lot. This can be a wild ride for new investors,” he said.
Is It Really Worth That Much?
Paul Gabrail, the founder and host of Everything Money, isn’t so sure about Tesla’s price tag. As he explained, “Tesla’s current valuation seems high compared to its financial metrics.”
Big Dreams, But Are They Too Big?
Gabrail also noted that a lot of Tesla’s value is based on Musk’s grand visions. But as anyone who’s waited for full self-driving cars knows, sometimes those visions take a while to become reality.
Don’t Put All Your Eggs in One Electric Basket
Throwing all your money at Tesla is like going all-in on a poker hand. That might be the right move for a seasoned investing professional — but maybe not the best bet for a newbie.
More Factors To Consider
Dip Your Toes In
“For first-time investors, I do not recommend starting out investing in individual stocks, regardless if it’s Tesla or any other company,” shared Gabrail. “I think investing in a volatile stock with a lot of hype, like we’ve seen with Tesla, is not a good idea.”
Instead, Gabrail recommended exchange-traded funds (ETFs) that include Tesla, like the S&P 500 or QQQ.
Materazzi suggested looking at index funds. He said, “They mix several stocks together, so they don’t fluctuate as much.”
Do Your Homework
If you’re dead set on buying individual stocks, Gabrail said to focus on the numbers.
“Remember, investing should be based on the present value of all future cash flows, not just on hype or potential,” he said.
Make sure you’re putting your hard-earned money into stocks that deliver.
Know Thyself (And Thy Bank Account)
Hodgins also reminded us to think about our own risk tolerance. Basically, don’t invest money you can’t afford to lose, unless you enjoy living on the edge.
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