How to invest in Tesla

Author: Kevin McHugh, Head of Publishing at Banked.

With Tesla (TSLA) and founder Elon Musk in the news almost daily, Kiwi investors may be wondering how they can get a piece of the action and invest in Tesla from New Zealand.

The company is worth more than USD 800 billion and recently announced plans for another stock split, this time 3-for-1, which will drop share prices to a more reasonable level for retail investors.

Since it isn’t listed on the NZX, the process for investing in Tesla is a little different from buying shares in a local company. Below, we’ll give you some background on the company, examine some key financial data, and then work through a step-by-step guide to investing.

Let’s dive in!

What is Tesla?

Formed in 2003, Tesla is an American company that designs, manufactures, and sells electric cars and solar roofs. The company’s mission is to ‘accelerate the world’s transition to sustainable energy.’

To this end, Tesla produces some of the most popular all-electric cars on the market, including the Model S, Model 3, Model X, and Model Y.

These vehicles are not only emission-free but also can sometimes offer superior performance to their petrol counterparts – the Tesla Model S, for example, can go from 0-60mph in just 2.28 seconds!

In addition to cars, Tesla also offers solar roofs. These are designed to look like traditional roof tiles, but are made from tempered glass and contain solar cells that generate electricity for the home.

The electricity from the solar panels can be kept in the Powerwall, a battery solution that drastically reduces a home’s reliance on the local power infrastructure.

Musk, the founder and CEO, is currently listed as the world’s richest man, with a net worth eclipsing $250 billion.

Financial history

As with any stock, there is risk to investing in Tesla; however, its price has exploded over the last two years, reaching a high of $1,243.90 USD per share in early November 2021. That represents an increase of more than 18x since November 2019.

The reasons for this are many, but include an increase in demand for electric vehicles (EVs) as consumers become more environmentally conscious, as well as Tesla’s aggressive expansion plans. The company is now the world’s largest EV manufacturer and is rapidly increasing its production capacity.

In addition to this, Musk and Tesla have been at the forefront of the retail investing renaissance, and a 2020 5-for-1 stock split resulted in a huge jump in value. With another split recently announced, the company will try to drive its price even lower to make investing more accessible.

3 step to buy shares in Tesla

Tesla is listed on the Nasdaq stock exchange in the United States, so to invest, you’ll need to open a brokerage account that allows you to trade US stocks.

1. Select a share trading platform

There are a few firms that facilitate this – we’ve listed some of them below with a summary of their offerings, but make sure to check out our full share trading platform comparison:

Sharesies

The face of retail investing in New Zealand, Sharesies offers benefits like no minimum investment, fractional share purchasing, many NZ, US, and Australian exchange-traded funds (ETFs), and no subscription fee.

Just in the last five years alone, more than 575,000 people have joined the company, investing over $1.8 billion.

Hatch

A platform designed specifically to give Kiwis access to the US markets, Hatch also offers fractional shares and a flat trading fee for any purchase of 300 shares or less. A low exchange premium is another enticing benefit.

Stake

Stake is an Australian platform and a great option for New Zealand investors. It offers a top rewards program that can help you earn in other ways. On US trades, there is no brokerage fee attached, making it an attractive option for those who want to invest in Tesla.

Other options

It’s also possible to buy Tesla shares through either Jarden Direct or Tiger Brokers. ASB Securities, ASB’s stare trading service, is ruled out as it only offers access to New Zealand and Australian markets.

2. Open and fund your account

Once you’ve chosen a platform, you’ll need to open an account. This is usually done with just a few clicks, though you’ll want to read the fine print to make sure that you are comfortable with how much data you will be providing the service.

When you’ve opened an account, fund it with enough money to cover the cost of your Tesla shares. For example, if one Tesla share costs $700, and you want to buy 10 shares, you’ll need to deposit at least $7,000 into your account. Bear in mind that micro-investing platforms such as Sharesies, Stake and Hatch allow you to buy less than a share so you can buy as much or as little as you like.

It should be noted here that because it is a US stock, all investments will be first converted into USD. That means your investment is also subject to changes in value between the two currencies and share trading platforms have their own fee for converting the currency.

3. Buy your Tesla shares

Finally, once your account is funded and verified, you can begin buying Tesla shares! Search for the stock (TSLA) on your broker’s platform and enter the number of shares you’d like to purchase – it’s as simple as that.

As mentioned previously, many NZ-based share trading platforms allow you to buy fractional shares. Several also have auto-invest options — great if you want to purchase to keep buying into the company regularly.

Pros and cons of investing in Tesla

First off, it should be said that looking for short-term payouts in stock investing can be a dangerous game. Wild fluctuations in price, especially with companies that are under so much public scrutiny, can result in a drastic drop in value on a day-to-day basis.

That said, there are a handful of benefits associated with long-term investing.

The pros

• A strong brand: Tesla is one of the most well-known electric car companies in the world and has a very loyal customer base. Their brand awareness is off-the-charts, with media attention being given to them daily.
• Innovation: Tesla is constantly pushing boundaries when it comes to technology and engineering. This has allowed them to become a leader in the all-electric car market and has driven their stock price steadily upward.
• Growth potential: The global electric vehicle market is expected to grow significantly in the coming years, and Tesla is well-positioned to take advantage of this trend.

The cons

On the flip side, like any other stock, there are also some risks associated with investing in Tesla from New Zealand:

• High valuation: Tesla’s share price is currently very high, which means that any slight dip could result in significant losses for investors.
• Dependence on subsidies: A large portion of Tesla’s revenue comes from government subsidies for electric vehicles. If these were to be reduced or eliminated, it could harm the company’s bottom line.
• Elon Musk: While he is undoubtedly a successful businessman, Musk’s mercurial personality means that he is a high-risk, high-reward investment. Even the smallest publicity can cause swings in positive or negative directions for the stock.

Final thoughts

With advances in technology and investment solutions, buying Tesla stock from New Zealand is easier than ever before. By following the steps above, you can gain exposure to one of the most innovative and exciting companies in the world. 

Not only is Tesla leading the way in the transition to sustainable energy, but it is also a company with huge growth potential. Do your research, build a diversified portfolio, and remember to stay disciplined with your investment strategy – and you may be able to ride the Tesla wave to the top.