Tesla (TSLA +3.75%) is one of the world's best-known and most popular companies. A big driver of its popularity is the presence of outspoken co-founder and CEO Elon Musk.
The visionary Musk, who also leads SpaceX, The Boring Company, Neuralink, xAI, and X (formerly Twitter), created Tesla with one ambitious goal: to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.
NASDAQ: TSLA
Key Data Points
Musk has certainly succeeded with that mission. Tesla produced almost 1.8 million electric vehicles (EVs) in 2024. In addition to producing EVs, Tesla develops, manufactures, and installs solar energy systems (Solar City), battery storage systems (Powerwall), and EV charging infrastructure (Superchargers). It has also developed other technologies, including autopilot, self-driving features, and artificial intelligence (AI).
The company is as ambitious as ever. Tesla aims to help lead the planet to sustainability. A key aspect of that strategy is to significantly ramp up its EV production. The company plans to build more gigafactories to manufacture its EVs, battery storage systems, and other sustainable energy products.
These investments should help drive the company's revenue and profits, giving the stock the power to soar and making Tesla a compelling stock for investors to buy. Here's a step-by-step guide to buying Tesla's stock and some things to consider before you do.
How to buy Tesla stock
To buy shares of Tesla, you must have a brokerage account. If you need to open one, here are some of the best-rated brokers and trading platforms. This step-by-step guide will show how to buy Tesla stock:
- Open your brokerage app: Log in to your brokerage account where you handle your investments.
- Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Should I invest in Tesla?
Before buying shares in Tesla, you need to decide whether you should invest in Tesla stock. Here are some reasons to consider investing in Tesla:
- You want to invest in a company driven to accelerate the adoption of sustainable energy.
- You understand the risks of investing in Tesla, including the possibility that shares could lose value.
- You've thoroughly researched Tesla and understand how it makes money.
- You believe Tesla's strategy will increase its revenue and earnings at an above-average rate over the long term.
- You want to invest directly in stocks and have the time to follow the company.
- You don't need to earn dividend income.
- You are confident that Elon Musk can lead Tesla and handle all his other responsibilities.
- You plan to hold shares for the long term and ride out any near-term volatility.
- You think that more auto companies will follow Ford (F +0.54%), GM (GM +0.61%), and Rivian (RIVN +4.46%) in adopting Tesla's supercharging network, making it a growth driver for the company.
Conversely, here are some reasons an investor might choose not to buy shares of Tesla:
- You need the money you plan to invest in Tesla stock to cover emergencies or for a major planned purchase within the next three to five years.
- You're concerned about the company's valuation.
- You're worried about the economy, your job, health issues within your family, or other pressing matters.
- You have yet to research Tesla and need to know what it does and how it makes money.
- You don't have the time to invest directly in stocks and follow Tesla.
- You're near retirement and need dividend income.
- You're concerned about the risk that shares could lose value.
- Elon Musk's values don't align with yours.
- You're worried that Musk's focus on his other business pursuits like X or his involvement in DOGE could take away his focus on creating value for Tesla shareholders.
- You don't think other automakers' growing adoption of Tesla's supercharger network will be a profit driver.
Is Tesla profitable?
Earnings growth is one of the key drivers of a company's stock price over the long term.
Tesla is a very profitable company. The company reported $97.7 billion of revenue in 2024 (up 1%) and $7 billion of net income. While its earnings were down sharply from the prior year (down 53%), that was because it received a $5.9 billion one-time, noncash tax benefit the prior year.
Tesla is also free-cash-flow positive. The company produced $3.6 billion in free cash flow in 2024, which helped grow its cash and investments balance to $36.6 billion. This put Tesla in a strong financial position.
Tesla's strong profitability and cash flow should help power its stock over the long term. If the company can continue growing earnings faster than average, the share price should gain value in the coming years. However, shares could crash in value if Tesla hits an earnings growth speed bump.
Does Tesla pay a dividend?
As of 2025, Tesla didn't make dividend payments to its shareholders. The company retains 100% of its earnings and cash flow to reinvest in growing the business and its cash balance.
Given the company's continued heavy investments in expansion, it likely won't start paying dividends anytime soon. It's not an ideal stock for those who need to earn passive income for retirement.
ETFs with exposure to Tesla
Instead of actively buying shares directly, you can passively invest in Tesla by investing in a fund holding its stock. Tesla is one of the largest publicly traded companies by market capitalization and is a widely held stock.
Tesla is in several stock market indexes, including the S&P 500 index and the Nasdaq Composite index. As a result, index funds and exchange-traded funds (ETFs) that benchmark their returns against those indexes hold Tesla stock.
According to ETF.com, 404 ETFs held a reported 403.9 million shares of Tesla as of early 2025.
Exchange-Traded Fund (ETF)
Among the most notable funds with a meaningful weighting to Tesla stock are:
- Consumer Discretionary Select Sector SPDR Fund (XLY +2.64%): This fund provides investors with exposure to the consumer discretionary sector of the S&P 500 index. Tesla was the ETF's second-largest holding in early 2025 at a 14.8% allocation. This fund has a very low ETF expense ratio of 0.08%.
- Simplify Volt TSLA Revolution ETF (TESL +3.23%): This fund aims to make a concentrated bet on disruptive companies it believes will dominate the autonomous driving sector. Tesla was its top holding in early 2025 with a 17% allocation, split between an 11% equity position and a 6% call option position. The fund has a relatively high expense ratio of 0.99%.
- ARK Autonomous Technology & Robotics ETF (ARKQ +2.00%): The actively managed ETF by Cathie Wood focuses on investing in companies engaged in autonomous technology and robotics. Tesla was the fund's largest holding in early 2025 at an 11.4% allocation. The ETF has a 0.75% expense ratio.
Will Tesla stock split?
As of early 2025, Tesla did not have an upcoming stock split. However, the company has completed two stock splits in its history as a public company:
Type of Stock Split | Date | Pre-Split Price |
|---|---|---|
5-for-1 | August 2020 | Around $2,200 per share |
3-for-1 | August 2022 | Around $900 per share |
Each time the company split its stock, the share price decreased to a more accessible level for individual investors. The most recent split reduced the share price to about $300.
As of early 2025, Tesla stock was below that post-split level at roughly $250 per share. It seems unlikely that Tesla will split its stock anytime soon. Given the historical trend, Tesla will likely wait until shares are closer to $1,000 before announcing another split.
Related investing topics
The bottom line on investing in Tesla stock
Tesla is one of the most innovative companies in the world. It has a charismatic and controversial leader driving the company toward an ambitious mission. If he's successful, Tesla's stock price could ride higher, enriching its shareholders in the process.
Many people want to invest in Tesla stock. It's easy to buy shares. However, before you do, make sure you want to. It might not be for everyone.
FAQs
About the Author
