Tesla stock via Etoro ?

TOP_CAT

Does anyone know about Etoro and buying Tesla stock ?

Heard alot from someone who buys into this and is convinced on its wealth gains after over a year of monthly stock buying ..even though they have never ever made a withdrawal .

They claimed to have had $500,000 of stock but now have $300,000  only putting in £1500 a month with leveraging as much as poss ie. 2x or 5x.

They are 100% convinced in this .

I dont gamble so its highly unlikely I would buy tesla stocks via Etoro but I did find it interesting how convinced this person was of making hundreds of thousands of dollars with 2x or 5x  leveraging via etoro and tesla stocks.

As said they put money in each month..... but have never withdrawn anything .

Common sense says making $300,000 -$500,000 isnt as easy as they make it out to be .
So its got to be a mugs game .

HCIMbtw

leverage = borrowing/risk 

I'm going to provide a simple scenario: 

Essentially you put in £10k, use five times leverage on platform to make an investment

So you use that £10k to buy £50k worth of shares (5x leverage)

because you are effectively borrowing £40k from etoro, you will pay some interest on this borrowing/leverage.. not sure what % as I haven't done it (probably rubbish)

If the telsa share price falls from £1,000 to £800,  the £50k shares you own falls to £40k, then etoro will close your share position with tesla and you have nothing left, sometimes referred to as a margin call. If they dont close your position and the share price falls to £500, then you would be £15k in debt to the platform, and paying interest on a 40k loan (even worse than just losing your £10k). 

The benefit of leverage is it helps you own more of something, if the share price goes from £1,000 to £1,200 you would make £10k, doubling your own £10k when the share price has only moved 20%.The downside is you don't own all the asset you are buying, you pay interest on the debt to own it and your position can be closed by the lender (not you). 

People can get into massive debt if they misuse leverage

-------------------------

The reason your friend has done ok is because Tesla share price has been on an absolute tear over the past few years.. stock goes up he wins, and the leverage helps him win more.. but it is risky

I personally could not recommend going anywhere near tesla at the moment... that doesn't mean it won't go up.. but I wouldn't want to risk just on the one company 

If your friend has been putting money in for 2 years like this is totally possible, the share price has more than x10, for 1 year only, the share price has roughly doubled in the past year so not likely.. unless they were doing CFDs on leverage perhaps

Thrugelmir

That's Etoro's business model. Draw investors in with 0% trading fees. Then suck them into trading CFD's.  Attracts those that like to gamble and hopefully win big. 

tebbins

What exactly is it they're convinced of? It's very possible that say they put in £1500 a month in 2019 (or earlier) so £18,000, when the price looks to have averaged around $40-$80, call it $60, that given the price is now around $1100 so nearly 20x that their Etoro account could be around those figures you suggest.
If they have really made that much, they should thank their lucky stars, sell the bulk of it, take the capital gains tax hit and diversify, say into a global equity tracker.

Thrugelmir

With the manner in which the TSLA share price gyrates. Highly possibly to have also lost money on some purchases.