At the start of 2020, investors were still fiercely arguing about whether the bulls or bears had the upper hand. Over the past year, the question has been very definitively settled: Tesla stock rose over 740% in 2020 and the company joined the S&P 500 index at the beginning of December.
Now, Tesla is larger than the 9 largest traditional automakers combined. That’s despite the fact that Elon Musk’s company only delivered around half a million cars last year.
So, what does the future hold for Tesla and should you buy into this electric car maker? In this guide, we’ll cover everything you need to know about Tesla stock and show you how to buy Tesla shares UK with no commission.
Step 1: Find the Best UK Stock Broker to Buy Tesla Shares UK
Before we show you how to buy shares in Tesla, first you need to choose a top UK stock broker. Tesla trades on the NASDAQ stock exchange in the US. So in order to buy shares of this company, you’ll need a UK stock broker that offers trading on US shares.
The good news is that Tesla is a big enough company that most UK brokers that support international markets offer the company’s shares for trading. So, you can choose a broker based on other factors like the cost of trading, the types of trading tools available, and how trustworthy the broker is.
So, let’s take a look at two of the top UK brokers you can use to buy shares in Tesla.
1. eToro – Buy Tesla Shares with 0% Commission
eToro is one of the top brokers and best automated trading apps in the UK, offering more than 800 shares from markets in the UK, US, and around the globe. You get to choose between trading Tesla CFDs with 0% commission or buying shares outright. If you choose CFDs, you can apply leverage to your trades up to 5:1.
We’re very impressed with eToro’s trading platform, which includes a wide variety of tools for short term stock trading and long-term investing. The charting interface, available for desktop and mobile, includes more than 100 technical studies and drawing tools built in. On top of that, the platform includes a news feed, economic calendar, price alerts, and price forecasts from professional stock analysts.
Another key feature to eToro is the platform’s social trading network. You can connect with millions of traders to share trade ideas, find new strategies, and gather information. The social network enables eToro to offer a market sentiment gauge with every stock, so you know whether eToro traders are buying or selling a company’s shares. You can also copy other traders’ positions to build a strategy or investing portfolio in minutes, which makes it even easier to learn how to buy Tesla stock UK.
eToro doesn’t charge any fees for share CFD trading or for forex trading, cryptocurrency trading, or commodity trading. There is also no monthly fee to worry about with this broker, although you will pay a £4 withdrawal fee and a £15 inactivity fee if you don’t place a trade for a full year.
eToro is regulated by the UK’s Financial Conduct Authority and all accounts are protected by the FInancial Services Compensation Scheme. Another plus to this broker is that it offers customer service 24/5 by phone or email.
67% of retail investors lose money trading CFDs at this site.
2. Libertex – Trade Stocks, Forex, and More Commission-free
Libertex is a forex broker that also offers stock trading, commodity trading, and cryptocurrency trading. The selection of stocks isn’t huge – Libertex only offers CFDs for around 60 different shares, primarily from the US – but Tesla shares are available. Plus, you can trade with leverage up to 5:1.
One of the things that makes Libertex unique is its approach to trading fees. Libertex charges a low commission of around 0.1% to 0.2% per trade, with no additional spread. That ends up being cheaper and more predictable for many traders than spread-based fees, which is a major plus for this brokerage. In addition, Libertex doesn’t charge any account fees other than an inactivity fee after 180 days without trading.
We also like Libertex’s trading platform, which is available over the web and as a mobile trading app. You get access to dozens of built-in technical indicators and drawing tools, plus a news feed and economic calendar. Libertex doesn’t have a ton of fundamental data or analyst reports, however, so this broker’s tools are more suitable for technical trading.
Libertex is regulated by the Cyprus Securities and Exchange Commission (CySEC), which is one of Europe’s highly regarded financial watchdogs. You can fund your account with a variety of common payment methods, including credit cards and e-wallets like Neteller and Skrill. Libertex offers support 24/5 by email in case you need help setting up your account.
74% of retail investors lose money trading CFDs at this site.
Step 2: Analyze Tesla Shares
Tesla is one of the most controversial stocks on the US market.
Many investors believe that this company’s battery technology, control over the global electric vehicle market, and solar power business make this one of the most valuable companies in the world. On the other hand, there is no shortage of bears who believe that Tesla stock is grossly overvalued and the current Tesla share price is poised for a massive fall.
So before you buy Tesla shares, it’s important to do your research on this company and come to your own conclusion about what it’s worth. Let’s take a closer look at Tesla’s past to help you understand what the future might bring for this company.
Tesla Share Price UK
Tesla, the electric vehicle manufacturer run by Elon Musk, was founded in 2003. The company went public in 2010 at a price of $17 per share, raising $226 million in the process.
For many years, the stock traded relatively flat. By 2014, however, it grew to encompass half the market cap of Ford, the largest American car maker at the time. Since Tesla produced only tens of thousands of cars a year at the time and had a luxury price point, the company was famously shorted by many renowned hedge funds and investors. In fact, short bets on Tesla made up a huge portion of trading on the company’s stock until earlier this year.
By the start of 2020, Tesla stock had reached an – at the time – eye-watering price of nearly $500 per share. Then the Tesla share price went exponential. Tesla gained more than 740% in 2020. After accounting for a 5-to-1 stock split in September, Tesla ended the year at over $750 per share ($3,750 before the split).
Tesla’s astounding growth was fueled by several factors, all of which grew on themselves. First, it was a stock market darling at a time when a massive number of new traders piled into the market thanks to the coronavirus pandemic.
Second, Tesla announced significant advances in its self-driving car technology and announced plans for a consumer vehicle in the $25,000 price range.
Third, Tesla finally approached its long-held goal of producing 500,000 vehicles in a single year – in a year when manufacturing was severely impacted by the COVID-19 pandemic.
Finally, Tesla was added to the S&P 500 index, which meant that billions of dollars’ worth of funds started investing in Tesla at the start of December.
Tesla Stock Fundamentals
At the current Tesla share price of $816, Tesla now has a market capitalization of $773 billion. That makes it the 4th largest company in the US and larger than the 9 largest car makers in the world combined.
From a fundamental perspective, Tesla’s valuation is extreme. The company has a price-to-earnings (PE) ratio of 1,617. For reference, the PE ratio of the S&P 500 is around 38 and Amazon’s PE ratio is 92. There are almost no companies in the world that are more overvalued than Tesla based on earnings.
Of course, current earnings are less important to Tesla investors than future earnings. Tesla saw earnings growth of 73% year over year, which is unheard of for most companies. Revenue grew nearly 40% in 2020 as well.
Tesla Dividend Information
Tesla does not pay a dividend and is not expected to for many years to come. The company is still heavily invested in growth and is likely to plow any excess income into research and development or expanded manufacturing capabilities.
Should I Buy Tesla Shares UK?
As we noted above, investors are extremely torn over Tesla stock. To give a fair view of this company’s potential, we’ll take a look at some of the main points in both the bulls’ and bears’ cases for Tesla.
The Bulls’ Case for Tesla
Electric Vehicle Dominance
One of the main things that Tesla has going for it is that it’s the leader in a rapidly growing industry: electric vehicles. More and more governments are subsidizing electric vehicles or phasing out fossil fuel-driven vehicles, so demand for battery-powered cars will only increase. Right now, Tesla unquestionably has better mass-market battery technology than any other company in the world.
In 2020, Tesla sold 17% of the world’s new electric vehicles. The company could easily come to dominate the electric vehicle market not just in the US, but around the globe if it continues expanding its manufacturing capabilities. Manufacturing has long been a headache for Tesla, but the company has been building several new factories that should solve that problem within the next few years.
Automation is the Future
One of the things that’s most attractive to bulls about Tesla is that the company isn’t just building electric vehicles – it’s also building autonomous vehicles. Tesla has already integrated self-driving capabilities into its vehicles to a greater degree than any other automaker, giving it a huge head start in the race to build self-driving cars. If you’ve ever driven a Tesla, you’ll know firsthand just how impressive the company’s autonomous driving technology really is.
In fact, Elon Musk recently announced that Tesla would release its first fully self-driving cars in 2021. Whether that will actually happen is yet to be seen, but it signals that Tesla is extremely close to making this long-awaited technology a reality on the road.
If Tesla is the first to pull off self-driving cars, the possibilities are virtually endless. The company could move into ridesharing and instantly knock out huge companies like Uber and Lyft. Or it could move into delivery and partner with or challenge Amazon. Whatever Tesla decides to do with its technology, it’s sure to push the stock higher.
The Bears’ Case against Tesla
Bears would argue that Tesla’s current valuation might be justified if it were the only electric vehicle maker in the world. But it isn’t.
In fact, Tesla faces stiff competition from China-based BYD, which makes its own battery technology just like Tesla and has the backing of the Chinese government. The company even makes a car that goes head-to-head with Tesla’s Model 3 on price, speed, and battery capacity.
At the same time, traditional automakers like Toyota, GM, and Ford have all been busy producing their own electric vehicles. These companies already have enormous manufacturing capabilities and global logistics networks, so a strong electric vehicle model from one of these companies could be a serious challenge for Tesla.
Tesla’s Valuation is Extreme
Even if you like Tesla on a lot of counts, many bears argue, the company’s current stock price is too high to invest. At a PE ratio of over 1,600, Tesla is by far the most expensive car company that has ever existed – and one of the most expensive companies, in general, that has ever existed.
To be fair, though, it’s hard to beat down Tesla shares on valuation alone. If the company really can take over the electric vehicle market and be the first to develop an autonomous vehicle fleet, the current stock price will look cheap in retrospect.
Step 3: Open a Brokerage Account
Ready to buy Tesla shares UK? We’ll show you how to buy shares in Tesla in UK using eToro, one of our top stock apps.
To begin, download the eToro mobile app from the Apple App Store or Google Play. Once it’s installed, create a new account with your email or sign in using your Google or Facebook login.eToro requires you to verify your identity before you can start trading. You can do this via mobile by uploading a photo of your driver’s license or passport, along with a photo of a recent bank or utility statement that shows your address.
Next, you can deposit funds into your account. eToro accepts a wide range of payment methods, including debit or credit card, bank transfer, or e-wallet like Neteller or Skrill. You must deposit a minimum of £140 when you first sign up for a new account.
Step 4: How to Buy Tesla Shares UK: Tutorial
Now you’re ready to buy shares in Tesla with eToro. In the app, tap the search icon and enter ‘Tesla.’ Tap on the company when it appears in the drop-down menu, then tap ‘Trade’ on the Tesla stock page to open a new order form.
In the order form, you can enter how much you want to invest in Tesla in US dollars. Note that eToro allows you to purchase fractional shares, so you can buy as little as $50 of Tesla instead of putting down $800 for a single share.
Once you’ve decided how much to buy, you can select a stop loss or take profit level. Long term investors will want to leave these fields blank.
When you’re ready, scroll down and tap ‘Open Position’ to buy Tesla shares.
Tesla Shares Buy or Sell?
Tesla’s current valuation is eye-watering for any investor looking for undervalued stocks based on traditional metrics. Despite that, we think Tesla is a buy right now.
That’s because traditional metrics don’t capture Tesla’s full potential. As an automaker alone, Tesla is dramatically overvalued. But Tesla isn’t just another manufacturer – it’s a ‘distributed energy business,’ to use the words of billionaire investor Chamath Palihapitiya.
Tesla’s importance is in not just electric vehicles, but also in battery technology, self-driving vehicles, and solar energy. When all is said and done, Tesla could become the single most important green energy company in the world. We think that’s worth a lofty valuation.
In fact, by some analysts’ estimates, Tesla has only realized about one-third of its potential stock price. It may take some years, but watch for Tesla to disrupt the energy utility market in the US – and then globally – by pairing renewable energy technology with its batteries and automation systems.
Of course, as bears will point out, there’s no guarantee that Tesla will be the company to lead the world into a renewable future. It’s possible that this company is a stepping stone. So, only buy Tesla shares if you can stomach a lot of risk and are willing to wait several years to realize a potentially massive return on your investment.
Our Verdict on Tesla Shares UK
Tesla’s rise over the past year has been astounding. In 2020 alone, Tesla stock gained 740% and Tesla became one of the largest companies in the world by market cap.
Still, we think Tesla has a lot more room to grow. Tesla’s revenue is forecast to grow 31% over the next 3 years. After years of dealing with manufacturing setbacks, Tesla is finally rolling hundreds of thousands of cars off its assembly lines and getting closer to releasing its first fully self-driving vehicles. Going forward, Tesla can also leverage its leading battery technology to upend traditional energy markets.
Tesla stock is risky, especially since the company is extremely overvalued based on traditional earnings metrics. However, we recommend Tesla as a strong buy based on the potential for this company to become one of the most important businesses in the world over the next few years.
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