The Motley Fool

Should I buy Tesla shares for my ISA today?

Image source: Tesla

Tesla (NASDAQ: TSLA) shares are on fire right now. The stock has soared over 600% in 2020 and UK investors can’t get enough. It’s the eighth most purchased shares on the Hargreaves Lansdown investment platform. Pardon the pun, but Tesla’s share price performance has been electric.

Bearing this in mind, is this stock rally likely to continue? Let’s take a closer look at the investment case.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Strong results

Revenue from Tesla’s automotive division has been growing quarter-on-quarter, which has helped the share price. Most of the company’s sales come from its electric vehicles, but Tesla also has a growing energy generation and storage segment.

Things look promising for the energy business as demand for its solar products remains strong. Tesla shares have rallied as investors are banking on the hope that it can grow this alternative division and diversify its revenue.

Inclusion in S&P 500

Recently, Tesla shares have soared on the news of it entering the S&P 500. The inclusion of the company means that all the passive funds that track the index will need to buy the shares in substantial quantities. I believe this bulk buying means that Tesla shares are likely to continue to rise in the short term.

The heavy buying from the index-tracking funds is expected to be temporary. I believe traders are using this opportunity to buy and sell Tesla shares around the inclusion date on 21 December. I’m a long-term investor and so will focus on the company’s performance, rather than its index inclusion.

Market reaction

The surge in Tesla shares has been met with mixed views. Goldman Sachs has just upgraded the stock from a hold to a buy with a price target of $780. Tesla shares are currently trading at $643, which means that investors could get a further 20% gain.

According to, 11 out of 37 analysts rate Tesla as a hold, with 9 rating it as a buy. From this I deduce that the consensus view is to wait and see as investors are unsure whether to dip their toe in.

Not everyone is positive. Hedge fund manager, Michael Burry is bearish on Tesla shares. He featured in the 2015 Hollywood hit The Big Short after predicting the 2008/09 housing market crash. Burry is pessimistic on Tesla’s outlook and has even advised the founder, Elon Musk to take advantage of the sky high stock price to raise more cash.

Be cautious

Elon Musk himself has warned Tesla’s employees that the share price could get “crushed like a soufflé under a sledgehammer”.

He highlighted in a recent leaked internal email that the company’s actual profitability is very low. Investors are placing emphasis on future profits, which if not met will result in the price tanking.

Stock price

There’s no denying that Tesla shares have performed well in 2020 but I can’t justify buying the stock for my portfolio at current levels.

Rather than the direct stock, I would prefer to buy Scottish Mortgage Investment Trust, which has an impressive track record. It’s a global portfolio of private and public companies and includes Tesla, should I want some exposure to the company.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Tesla. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.