Tesla, known around the globe for its iconic electric vehicles, is back amongst the ten largest companies in the world, measured by market capitalisation. While the automotive segment accounts for 85% of the company’s revenue, its energy generation and storage business grew 74% in the latest quarter, reaching a contribution of 6% in total sales.
In this article, we’ll share tips for choosing a stock broker to buy Tesla stock from Australia, provide a step-by-step guide to help you make your first purchase, highlight exchange-traded funds (ETFs) with high exposure to Tesla stock, delve deeper into the reporting structure of Tesla, and more!
How to buy Tesla stock (Step-by-step guide)
1. Choose a good stock broker
Since Tesla is one of the ten largest companies in the world, you can choose from a myriad of brokers to help you make the purchase. That said, consider the terms offered by each broker and make sure the broker you end up picking works with residents of Australia. Below we highlight four low-cost brokers who work with Australian residents and are suitable for beginner investors:
|Broker||Stock commission, US||Minimum Deposit||Regulators||Australian dollar available as base currency|
|eToro||$0||USD 50||FCA, CySEC, and ASIC||No|
|Interactive Brokers||Up to $0.0035 per share with a minimum of $0.35 for international investors||AUD 0||FINRA, SIPC, SEC, CFTC, IIROC, FCA, CBI, AFSL, SFC, SEBI, MAS, and MNB||Yes|
|Tiger Brokers||$0.0099 with a minimum of $1.99||AUD 0||SEC, FINRA, ASIC, and HKSFC||Yes|
|Saxo Bank||$0.02 per share with a minimum of $10.00||AUD 1,000||ASIC, FSA, FCA, SFC, MAS, FINMA, and DFSA.||Yes|
As you can see from the table above, Interactive Brokers, Tiger Brokers and Saxo Bank offer AUD as a base currency, meaning you can fund your account in AUD. eToro only offers AUD as display currency. In either case, your Tesla trades will be executed in USD, meaning you will incur foreign conversion fees from the AUD/USD exchange rate. This makes Tesla a relatively less attractive investment than equities traded in Australian dollars on the Sydney Stock Exchange.
2. Open and fund your account
Once you have weighed the pros and cons of each broker, you are all set to open an account. The process usually takes a few days as the broker verifies your identity. After the process is finalised, you must deposit money into your account.
3. Place a “Buy Order”
If you have found an online broker that suits your needs, managed to open an investment account, and made the initial deposit, you are all set to buy your stock. All you have to do is find the share within your chosen broker and place a buy order. For this example, we will use eToro:
a) Search for Tesla stock ( or the ticker “TSLA”):
b) Click “Trade”:
c) Choose the order details. Now, it’s time to choose how to invest:
- Amount: You choose the amount you want to invest in Tesla instead of the number of shares. In this way, your investments may be fully or partially in fractional shares*1.
- Units: As opposed to “Amount,” here you define the number of shares you want to purchase (note: you can buy using either “Amount” or “Units,” up to you!)
- Leverage: You can choose the level of leverage. “X1” means no leverage (if it were “X2” or above, you would not be trading real stocks but CFDs on Tesla stock instead). That’s why you see “you are buying the underlying asset.”
- Stop Loss: Define the maximum you are willing to lose before closing your position automatically;
- Take profit: Define the profit amount that makes you close your position automatically (if reached).
Only the “Amount” (or “Units”) and “Leverage” are mandatory fields.
d) Place the order: Finally, click “Open Trade,” and a new window will show up where it says “order filled,” your exposure, and lets you share your trade with other people.
ETFs – an alternative way to gain exposure
ETFs allow you to gain exposure to a dozen or even hundreds of companies with a single investment. ETFs can be a good option if you:
- Want to complement your Tesla position with similar companies;
- Want to limit your portfolio volatility (ETFs invest in many companies operating in different lines of business, limiting your exposure to idiosyncratic risks);
- Are interested in following a specific theme in your investments (technology stocks, consumer discretionary stocks, etc.);
Some ETFs you may want to consider are:
- Consumer Discretionary Select Sector SPDR Fund (ticker XLY) tracks 53 stocks in the Consumer Discretionary sector, although it is heavily skewed to large capitalisation companies. The ETF distributes dividends, and the expense ratio stands at 0.10%. The ETF’s largest holding is Amazon at 24.37%, followed by Tesla at 17.13% and Home Depot at 4.88%.
- Invesco QQQ (ticker QQQ) is a broad technology ETF following the Nasdaq-100 index. The ETF distributes dividends, and the expense ratio stands at 0.20%. The weight of Tesla in the ETF is 2.85%, ranking it at 8th position, with Apple at 11.08% and Microsoft at 9.51%, the largest ETF components.
- Global X Autonomous & Electric Vehicles ETF (ticker DRIV) tracks 75 companies likely to benefit from the wide adoption of electric and autonomous vehicles. The ETF distributes dividends, and the expense ratio stands at 0.68%. The weight of Tesla in the ETF is 2.74%, ranking it at 6th position, with Alphabet at 3.49% and Nvidia at 3.19%, the largest ETF components.
Tesla’s Financials and Performance
Once you have purchased Tesla shares, keeping track of how the company and its competitors are doing is a good idea. In doing so, you will get greater insight into whether to add to your position, hold it, or sell it to pursue better opportunities elsewhere.
Apart from the investor relation section (available here), there are specialised platforms to help you understand how Tesla is doing from a financial perspective. One platform you can use is Koyfin – you can access Company overviews, Key statistics, Financials, Transcripts, and more! Get a 20% discount on Koyfin.
For example, Koyfin allows you to get a quick handle on how the company’s revenues and margins (as measured by gross profit) are doing:
While such platforms cannot substitute your own research 100% of the time, they can be a very useful tool in the research process, saving you time and providing new investment ideas.
The go-to place to find up-to-date information on the company is its investor relations section, available here. Below we will provide a quick overview of the company’s operations.
In 2017, the company changed its name from “Tesla Motors” to simply ”Tesla” to highlight its other businesses. Case in point, Tesla now reports results in three main revenue lines:
- Automotive (85% of revenues)
- Services and other (9% of revenues)
- Energy generation and storage (6% of revenues)
Automotive sales primarily consist of vehicle revenue, including regulatory credits (credits sold to other automakers to help them meet fuel efficiency standards) and vehicle leasing. Automotive is Tesla’s highest gross margin segment, at ~20% most recently, although competition in the electric vehicle market is only set to increase, putting pressure on profits.
Services and others incorporate revenue from used vehicle sales, as well as fees paid when utilising Tesla’s network of Supercharging stations. The latter is set to increase its relative contribution in terms of revenue, given Tesla is opening up its network to non-Tesla vehicles. Tesla does not yet disclose the individual gross margin of “Services and other” since the revenue line is part of the greater “Automotive & Services and Other” segment, with a gross margin of 18.2% in Q2 2023.
Energy generation and storage includes the Powerwall (for residential customers) and Megapack (for businesses) energy storage systems, as well as solar energy solutions. The division has delivered substantial margin improvement, with its gross margin of 18.4%, up markedly from the prior-year period (11.2%).
Tesla is also developing technologies such as the Optimus robot, which Elon Musk predicted would be worth more than the car business one day. The company also started production of its Dojo supercomputer in July 2023, which will help it to achieve full self-driving.
Automotive companies traditionally try to run a conservative balance sheet with a net cash position, given the cyclical demand for cars. Tesla is no exception, with its net cash position sitting at around $21.5 billion at the end of Q2 2023.
Despite its low financial leverage, Tesla stock has experienced wild price swings in recent months, changing the value of the business by hundreds of percent in both directions. Thus, you should keep in mind that Tesla shares are more volatile than other automakers, such as General Motors or Toyota.
1*Fractional shares allow you to own only part of a stock or ETF, without paying the full price; this is useful for ETFs and stocks with a high absolute price, or when you want to diversify your positions. In our example with Tesla, the price per share is around $225 but you can invest as little as $10 to get exposure to Tesla stock.