Many investors wonder: Should Tesla invest in Bonds? The answer to this question depends partly on how much money you have to invest, the state of Tesla’s business, and your progress toward other financial goals. Creating an emergency fund is high on most lists. Aim for three to six months’ expenses, or about $500 to $1000, and deposit this money in a high-yield savings account. While this may seem like an overly conservative approach, experts suggest that it’s important to create an emergency fund.
The company’s recent announcement that it’ll delay bond offerings of over $1 billion in which it promises to use its electric car leases to finance future capital expenditures is a good sign for investors. It’s the third-tech company in less than a week to backtrack its asset-backed bond deals, following World Omni and Affirm Holdings Inc. Both of which made similar announcements in the past week.
In addition to the stock price, the bond price of Tesla is also highly correlated to operational and financial results and even extraneous events like the SEC suit. The company is expected to release preliminary production results this week, indicating whether Model 3 production was around 5,000 units per week for the first quarter. Good news will likely boost the bond price, while bad news will depress the bond price, wiping out the first year’s interest payments.
Investors seeking to reduce their risk exposure should consider the convertible notes issued by Tesla. Tesla has four such notes, each with a strike price and a term of up to 25 years. The face value of the note may be combined with common shares, or the full value of the notes could be consolidated with the common shares. Buying the convertible notes at a discount allows you to avoid the risk of investing in Tesla’s stock.
A Tesla investment decision should be based on faith in the company’s future performance. While qualitative and quantitative factors are important in determining where to invest, you must also consider the company’s total revenue, management, risk, and competition. Ultimately, if you have confidence in Musk’s vision and feel that he’ll be able to bring the vision of the company to fruition, it might be a worthwhile investment.
When investing in Tesla, investors must remember that the company is still a highly controversial stock. It has had a 38% share-price decline so far this year, but die-hard fans still flock to the stock. While it may not be the best investment for a long-term investor, it is still a viable option for those with a higher risk appetite. Investing in Tesla’s debt securities assumes that the company will continue to exist or merge with another company.
Although Tesla has a growing share of the electric vehicle market, its sales volume abroad has been problematic. It has cut prices multiple times in China, and monthly registrations there are below production capacity. Until the Berlin Gigafactory is finished, Tesla is exporting Chinese-made vehicles to European markets. This means that it’s more profitable to invest in Tesla’s stock than in traditional automobiles. It’s important to understand how the company operates and how volatile it is before deciding to invest in its stock.
A good reason to invest in Tesla is because it’s one of the few companies to have been successful in selling cars since the first prototypes were produced in 1834. If gas prices stay at decade lows, consumers will be less likely to switch to electric cars. If that happens, Tesla’s future revenue depends on its ability to sell more cars. But the price of gas remains low enough for legacy cars to stay on the road.
In addition to investing in Tesla stock, you can also invest in the company itself through a robo-advisor or an online broker. Tesla stock brokers offer many features and low trading commissions. However, their minimum account balances and commissions vary widely. As a result, you should carefully choose the one that suits your financial situation the best. If you’re not sure about your investment goals, NerdWallet recommends the following robo-advisors and online brokers: