There aren’t that many companies that have captured as much media attention as Tesla. This increased interest in Tesla shares from investors all over the world, including Australia. Even though this stock has been through many ups and downs (and continues to do so), you can still make smart investing moves with it.
This guide will help anyone who’s wondering how to buy Tesla shares in Australia – it’s not as hard as you think. As a bonus, we’ll provide the fundamental analysis along with useful information about the company.
The Basics of Tesla Shares
Tesla is an electric-automobile manufacturer based in Palo Alto, California. Whilst the company was founded in 2003, the actual Tesla that we know today dates back to 2004. This was when Elon Musk joined the company after investing over $7 million.
The company is publicly traded under the ticker TSLA and is listed on the NASDAQ exchange. The share price is affected by various factors, which we will cover in more detail later. So far, the biggest success was the Tesla Model 3 – this electric car beat all the competition and sold almost 140,000 models in 2018.
Elon Musk, Tesla’s CEO, owns a significant portion of Tesla’s stock – approximately 20%. The fact that the CEO holds so much seems risky to some investors. However, Musk assures them that he would never sell his stock out of the blue, which means there is no risk of him suddenly selling and causing the stock to plummet.
Another interesting fact about Musk’s behavior is that even his silly statements can have an effect on the stock price. For example, when prices skyrocketed when he tweeted that Tesla would go private at $420 a share and plummeted after a video of him smoking cannabis and drinking whiskey.
How to Buy Tesla Shares for Australians
If you are considering investing in this eco-conscious automotive business, you might not know where to start. Here is a step-by-step explanation of what you need to do.
1. Get Ready to Buy Tesla Stock
The best way to invest in Tesla in minutes is to choose a broker which operates in Australia. There is a wide range of platforms with low or no commission available, and many valuable trading tools. Research broker websites for more information and compare online reviews to choose the most suitable one.
After you choose a broker, you’ll need to go through the sign-up and depositing process according to the website’s rules. Once your account is open, you’ll be able to set up your online credentials – user ID and password – for logging on.
2. Research Tesla and Its Stock
Before diving into Tesla shares headfirst, you should have a good understanding of what to expect. You can’t justify investing in the stock market if the only thing you know about the company is the notoriously famous CEO.
Look at Tesla’s balance sheet, income statement, competition, management, etc. More information about the fundamental analysis will be in the next section. Overall, research analyst ratings and other key information, and if you like what you see, you can proceed to the next step.
3. Decide When to Buy Tesla Stock
Most companies on the stock market have somewhat unpredictable prices – but to different extents. When it comes to Tesla, the situation jumps from one extreme to the other with some regularity. Basically, you have three options to choose from:
- Buy the stocks now – For this option, you need to choose a market order in your brokerage account. This will be executed immediately at the best possible price for the time. The downside is that you could end up paying more.
- Buy at a specific share price – This one is called a limit order, which is when the trade is executed when the share value reaches a certain level. It introduces some predictability to your actions. The downside is the trade might not get fulfilled for a long time (if at all).
- Buy systematically over time – Rather than purchasing all your shares in one go, you can spread them over time. You’ll set the interval at which they will be bought (days, months, and even years). This method is called dollar-cost averaging.
4. Decide How Many Shares to Buy
The number of shares you can buy mainly depends on the amount of money you have at your disposal. Obviously, the more you can afford to spend, the more shares you can buy.
However, this is not the only thing that matters. The other thing you have to keep in mind is the diversification of your portfolio. There is a concept that all traders should stick to – “don’t put all of your eggs in one basket”.
There is no good reason to fill your portfolio only with the Tesla stock. It’s not only because of the uncertainty of its performance – regardless of how you feel about a certain company, it’s also best to have a diversified portfolio. This helps eliminate at least a portion of the risk that is inherent in the stock market.
5. Be a Smart Tesla Shareholder
Your job as a shareholder isn’t over when you finally buy the stock. Firstly, you need to keep an eye on everything related to that company and engage in shareholder activities. For example, you can see the annual financial report and follow the upcoming events posted on the Tesla website. Also, you can subscribe to their email updates.
Tesla posts all investor information to its website at Investor Overview, and the Investor Communication section is dedicated to quarterly updates. At www.sec.gov, you can find Tesla’s SEC filings, which shows the information that evaluates companies for investment purposes. If you have any other investor-related questions, you can email them to [email protected].
You can also request printed materials to be mailed to your address. However, this option doesn’t align with Tesla’s values, as it presents itself as an environmentally conscious company.
Lastly, how do you know when it’s time to sell your stock? Here’s an all-too-common scenario:
- You invest in a stock at $25, intending to sell it at $30.
- It reaches $30, but you think it has the potential to go further up.
- Even at $32, you want to wait a little longer.
- The stock drops to $28, and they decide to wait until it reaches $30 again.
- The stock never rises again, and the investor is forced to sell below the $25 mark.
This happens when investors let greed and emotion overcome rational judgment. If you want to remove human nature, consider using automated software or a limit order. These measures will streamline your decision-making process and help you gain profits while they’re still there.
Fundamental Analysis of the Tesla Stock
Due to the nature of the stock, traders can use technical analysis to identify strong support and resistance zones. However, you need fundamental insights to truly understand the value Tesla has to offer.
Tesla’s profit margin (which gauges the degree to which it makes money) is -0.55%. The operating margin (which measures the percentage of revenues remaining after paying all operating expenses) is 3.23%.
The Price/Earnings Ratio is negative for TSLA. However, the stock is valued rather highly – at 14.76 times its book value. Compared to other companies listed in the same industry, 99% are valued cheaper.
The Earnings Per Share has gone up 84.63% over the past year, which is an impressive result. The EPS is projected to grow even more in the coming years. Tesla has shown growth of 45.10% on average over the past five years, which gives us an indication that the growth is rapidly accelerating.
80% of its industry peers have a better Current Ratio, which is the company’s ability to pay short-term obligations or those due within one year.
Compared to an average industry Current Ratio of 1.64, TSLA is worse placed to pay its short-term obligations than its industry peers. 80% of its industry peers have a better Current Ratio. The company’s Quick Ratio (which measures liquidity) is also worse than the competition.
Altman Z is a credit-strength test that gauges a publicly traded manufacturing company’s likelihood of bankruptcy. TSLA has an Altman-Z score of 3.77, which means that it’s financially stable and has a low probability of going bankrupt.
What to Keep in Mind When Buying Tesla Shares in Australia
It doesn’t matter what company you’re considering investing in, there are essential indicators to keep track of. The current affairs that are essential for your investment analysis are the following:
- Financial reporting – We’ve described various methods to gauge how the company is performing. Keep an eye on financial reports: these are released quarterly, and annually on December 31st.
- Company news – What products are Tesla bringing to the market in 2020? Is the company expanding into different markets globally? Has Elon Musk been involved in a controversy as a prolific and often controversial tweeter? The events make a big difference.
- Wider news – Look out for external events, issues, and trends. For example, gas or electricity prices.
- Dividends – Dividend policies affect the number of shares you want to purchase. Tesla has never declared dividends to retain all future earnings to finance future growth. However, dividend payments aren’t completely out of the question in the future.
Since Tesla is a non-Australian venture, you’ll need to find ways to work with the stock as a participant in the international market.
One of your options is to purchase Tesla shares by connecting to a CFD broker that has TSLA available. While you don’t become a regular share owner, the stock’s price movements can generate profit for you. Since Tesla is known to be volatile, some investors very much prefer this option.
Also, ask yourself the following questions if you’re an Australian resident:
- Are you purchasing the right (TSLA) stock?
- Is the broker you chose licensed in Australia?
- Does the broker accept your preferred payment method?
- Do you know the Australian Securities Exchange (ASX) opening times?
- Are you a long-term or short-term investor?
Should I Buy Tesla Stock?
While some people are convinced that now is the best time to jump on board, others remain skeptical about investing in Tesla. Let’s see the rundown of the perks and downsides of this multinational automotive and energy company.
- Brand power with immense customer loyalty
- Unquestionably innovative products
- Years ahead of the competition
- Multiple products across a wide range of sectors
- The company mission appeals to many, and demand is rising
- Elon Musk is a wild card
- Erratic market performance
- High senior staff turnover
- Tesla vehicles will remain too expensive
When Is a Good Time to Buy?
No trading expert will be able to give you an accurate prediction for the future. We’ve gone over the basics of the Tesla share situation – now it’s your turn. The company will definitely encounter some hurdles, but in the long run, it has huge potential to outperform other car manufacturers. It’s worth mentioning that Tesla, being an American company, is slightly harder to buy in Australia. However, multinational traders such as Etoro, Fortrade, and Easymarkets open up great opportunities for investing in foreign companies. Make sure your actions are sensible and well-thought-out.