Everyone wants to make their money go further, and one of the best ways to do this is to put it to work by investing it in the stock market. Thanks to the widespread availability of trading platforms the world has opened up to investors, allowing them to go beyond the shores of their own country.
The US market has always been a popular choice among investors due to its sheer size and calibre, and this continues to be the case today. Many large companies such as Tesla are providing opportunities to investors to invest in their stocks, from Japan to Canada and everywhere in between.
However, the procedures that investors must follow may differ depending on the country they reside in. Here, we explain how UK residents can invest in Tesla stocks.
Choose a trading platform. If you are unsure, check our list of the best trading platforms in the UK.
Open an account. You will need your ID, personal and contact details.
Fill out the W-8BEN form. This is essential for UK investors looking to invest in US companies.
Fund your account. Many trading platforms require you to deposit a certain amount to start trading. The exact amount can vary by platform, so it’s important to check you have the right amount to fund your investments.
Research thoroughly. This is key to any successful investment. Fortunately, many trading platforms provide the latest news on Tesla’s stock movements, so information should be easy to find.
Buy the share. If you are happy with the stock valuation and think it’s the right time, all that’s left is to place the order.
Best Place to Buy Tesla
How to Buy Tesla Shares in the UK
Choose a Trading Platform
As a US-based company, Tesla is listed on the NASDAQ Stock Exchange, not LSE, so it's important you choose a platform that allows access to it.
Whilst choosing a platform, compare each viable option in terms of trading costs, currency conversion fees, and minimum deposit requirements. This ensures that you won’t get caught out by any nasty surprises.
As a UK investors looking to invest in US companies, currency conversion fees is one of the most important things to look out for. Though your money would normally go slightly further when converting Pounds into US dollars, you may lose a fair bit due to conversion costs. Make sure you check each platform thoroughly to ensure you get the best value for money.
Open a Brokerage Account
To open a brokerage account, you will need to provide some basic information, such as your ID, personal information, and contact details.
It’s worth noting that since Tesla is a US-based company, buying a share is exempt from Stamp Duty. Yet, regardless of the origin of the company, your profits above £12,000 will be subject to Capital Gains Tax – but there’s a way to avoid it.
By investing via a stocks and shares ISA, you can protect your earnings from CGT and contribute up to £20,000 a year.
Fill Out the W-8BEN Form
After you’ve opened an account, the next step is to fill out a W-8BEN form – this is mandatory for non-US residents and taxpayers, regardless of where they are based in the world.
Whatever platform you choose, they will usually provide the W-8BEN form for you, so all you have to do is fill it in online. Don’t worry if it seems confusing – in addition to providing the form itself, the majority of platforms will also provide you with guidance on how to fill it in and send it off.
A W-8BEN form is required by the Internal Revenue Service of the United States (IRS) to confirm that the investor is not a US resident, and therefore is not liable to pay the 30% income tax derived from any income they make from their investments.
Deposit Funds
While UK trading platforms offer numerous ways to deposit funds in a trading account, it’s important to check for any fees you may incur for doing so. This is particularly the case with card payments.
Tesla share price currently stands at $246 (£196) – but you can choose to invest more. However much you choose to invest in, it’s important not to deposit more than you can afford to lose.
Do Your Own Research
While we’re not advocating for excessively trying to time the market, it still makes sense to do some ground research.
A good starting point is the company’s investor relations page, as this can provide reliable in-depth detail of their past performance, as well as indicators of future performance.
Depending on the type of news that is shared, an announcement can significantly impact the price of company shares. If the business owner is on social media – and Elon Musk certainly is – it’s also a good idea to follow them to stay up to date on any potential business news.
It’s important to consider what you’re investing for, and how much time you have on your side. If you are investing for retirement and are getting closer to retirement, it is advisable to be more conservative in your dealings. However, if you have time on your side, you can afford to take more chances.
Regardless of your goals and where you are in life, we would advise you to ensure that you can hold your investments for at least five years, as this gives you the opportunity to ride out any bumps in the market. Investing is not always a smooth ride, so you need to make sure you can afford to wait out periods when a bear market takes over.
Place Your Trade
With everything else now taken care of, there’s only one thing left to do. Find Tesla in your preferred platform (trades under the ticker symbol TSLA) and tit that order button.
Tesla Share Under the Microscope
Tesla’s stock price fell by 65% of its value.
Despite this fall in stock value, Tesla’s annual net income for 2022 was $12.58 billion, a 127.79% increase from 2021.
Although Tesla’s stock price has enjoyed overall growth over the last few years, this ended in 2022 as the bearish sentiment took over. The stock price fell by around 65% in line with the decline in the markets. Nor was this limited to Tesla – markets shrunk across the board as the looming recession caused investors to lose confidence.
As 2022 saw rising inflation, many investors were forced to tighten their budgets. The electric vehicles industry is notoriously expensive to buy into, so it is perhaps no surprise that Tesla was hit hard.
Unfavourable market conditions resulted in Tesla’s share price dropping from $312 at the close of trading on the 1st of January 2022, all the way down to $173 on the same day in 2023.
As the world moves towards a Net Zero emissions target, Tesla is well-placed to take advantage. This may explain why the company posted a net income of over a 100% increase from 2021 despite the plunge in the price of individual stocks.
What’s Ahead for Tesla?
Tesla’s CEO, Elon Musk, is certainly an unpredictable character, and it has been suggested that his actions have impacted Tesla’s share price over the years. Yet despite this, Tesla’s stock value has increased from £173.22 at the start of 2023 to £188.87 at the time of writing.
While helpful, analyst forecasts can only give us an idea of what will follow, so it’s good to take them with a pinch of salt.
Despite the volatility of the markets, the consensus analyst forecast for Tesla stock price has been moderately bullish – 15 out of 30 rated the stock as a buy, while 11 gave it a hold rating, and only 4 recommended selling. For 2023, the price target stands at $202.84 while the highest stock forecast is $280, and the lowest is $115.
Tesla Stock Splits
A stock split is how a company increases the number of shares available to investors. When a stock is split, the value of each individual share is divided evenly. For example, if a share costs $210 at a 3:1 split, you would be given two extra shares per whole company share that you currently own, and each share would reduce to $70 in value.
A stock split is a good indication that a company is headed in the right direction. It displays a business’s confidence in its future by seeking additional investment.
Stock shares are not just good for the company that is seeking to raise more capital – It's also good news for investors. While current investors can increase their holdings, new investors are able to enter the market at a reduced rate.
Tesla has split its stocks twice in its history:
Split Ratio | Starting Price | Result Price | |
|---|---|---|---|
31 August 2020 | 5:1 | $165.11 | $32.022 |
25 August 2022 | 3:1 | $296.07 | $98.69 |
Using the ratio provided above, if you owned Tesla stock before the stock split and held onto it, you’d now have 15x the number of shares in less than 3 years!
Does Tesla Pay Dividends?
No, Tesla doesn’t pay dividends.
While some companies may pay out dividends to shareholders, Tesla chooses to use the profits to grow its business.
While investors may not get dividends from their stock holdings, Tesla’s decision to focus on accumulation rather than distribution means that the value of investors’ shares is likely to be higher than if it paid out dividends.
Alternative Ways of Investing in Tesla
While many people may wish to invest in Tesla stock, the high barrier to entry can be off-putting to some. Tesla’s share ranged between $312 and $123 within the last year, and some may not be able to afford to invest as a lump sum.
Fortunately, it doesn’t have to be this way. There are other, and most importantly cheaper, ways of buying a Tesla stock. These are:
Investing in funds
Fractional shares
Placing a bet on price movement using a UK CFD broker or spread betting
Investing in Tesla Through Funds
Instead of directly owning a Tesla share, you can invest in a fund that includes Tesla shares.
Funds are groups of investments that pool together a variety of assets like shares. When you invest in a fund, you don’t actually own the assets outright. Rather, you own a share of the assets in the fund.
Like owning shares outright, the price of your shares in a fund fluctuates depending on market performance. However, when investing in a fund, there is no need to time the market as this is taken care of for you.
Due to its gigantic size and success, you shouldn’t have many problems finding funds that have a substantial amount of weighting that is invested in Tesla shares. These can range from well-known funds such as the S&P 500 index to funds like God Bless America (YALL) - no, that’s not a joke, believe it or not!
Funds can be cheaper, grant instant diversification, and may help generate income
One of the best things about investing in a fund is that it is much more budget-friendly than buying individual shares. Depending on the type of fund or the investment platform you invest with, you may have to stump up some initial capital to start.
However, after that, the barriers are much lower, as you can invest smaller sums to grow your ownership of Tesla shares. It’s important to remember that when you invest in a fund you will have to pay an annual fee, which can vary depending on what fund you choose to invest in.
As well as being much more friendly to the wallet, investing in a fund grants instant diversification as your capital is spread out across the various investments held in your chosen fund. This provides a degree of security - if one stock underperforms, the others in the fund can help pick up the slack, thereby offsetting your losses.
Finally, investing in a fund gives you the chance to create another stream of income. Many funds give you the option of receiving a dividend and reinvesting it to grow the value of your investment.
While Tesla does not pay dividends, other companies may do. Of course, it’s entirely up to you which option to go for, but opting for a fund that holds dividend-yielding stocks gives you the chance to earn some extra income while also benefiting from being exposed to Tesla stock.
Funds that Include Tesla Shares: Our Top Picks
Fidelity MSCI Consumer Discretionary Index ETF (FDIS)
Tesla Weighting: 10.00%
Tracks: The performance of the MSCI US IMI Consumer Discretionary Index
Expense Ratio: 0.08%
VOO Vanguard S&P 500
Tesla Weighting: 1.26%
Tracks: The performance of the 500 largest companies in the US by market cap
Expense Ratio: 0.03%
Meet Kevin Pricing Power ETF (PP)
Tesla Weighting: 25.28%
Tracks: US-listed equity securities of Innovative Companies
Expense Ratio: 0.77%
Fractional Shares
This is fairly self-explanatory. Rather than owning a whole share, you can enter the market by purchasing a fractional share.
You’d be surprised just how low these shares can go. Although you may be expecting a decent-sized fraction, let’s say 25%, which would allow you to enter the market with a sizable holding at a reasonable price, it doesn’t stop there.
Far from it! You can also get 1/10, 1/100, or even 1/1000 of a share. Admittedly, though, you can only divide a whole number so many times.
It’s no surprise that fractional shares have taken off in popularity since their introduction in 2019. Many UK investment platforms such as eToro now offer this option to potential investors.
Trading Derivatives
This one's a bit trickier. Essentially, derivative products like contracts for difference (CFDs) allow you to bet on what you think is going to happen to a particular stock. Think of it like watching a football match – you’re not going to be lacing up at Wembley, instead, you’ll be sitting in the stands cheering.
How does it work?
So, when trading CFDs or spread betting, you don’t actually own the stock – you are placing a (hopefully sensible) bet on the price direction instead. Meaning that if you think a stock is going to increase or decrease in value, you will gain whatever the difference is in your favour.
For example, if a stock costs $100 and you believe it will rise, you would take a “long position” on the stock. If the value of the stock then rises by $10, you will gain this difference.
Unfortunately, it works the other way as well. If you get it wrong, you’re going to have to fork out the difference. Remember the Gamestop saga that broke the internet?
Derivatives are more cost-effective than outright owning a share, as you can take advantage of leverage. However, this is a double-edged sword. Think of it like a bet – the more you gamble with, the more you stand to lose.
We’re not advising you to be in favour of or against derivatives. Just make sure you do your research before you commit, and don’t invest/gamble any money you’re not happy to part with. It’s worth noting that between 70.8%-86.4% of retail investor accounts lose money when trading CFDs.
So, What’s the Best Way to Invest in Tesla?
As is the case with all things related to money, there is no one-size fits all approach. Everyone has different goals, risk tolerance, and available capital, so what works for someone else may not work for you.
Buying a Tesla share directly at the current market price depends on two things – money and time. If you have both of these, then Tesla is an ideal long-term buy.
If you don’t want to wait, derivatives are your best bet (pun intended). Investing in derivatives means you stand to gain from the continuous fluctuations of the market – if you get it right.
If you don’t want to place all your eggs in one basket, funds may be the choice for you. You can avoid the high cost of entry while gaining exposure to other companies. Why choose between Netflix, Amazon, and Tesla when you can have all three for a fraction of the price?
The only concrete piece of advice we can give is this – unless you’ve somehow perfected the power of time travel, you don’t know what the future holds. Don’t invest or gamble any more than you can afford to lose.
