How to buy and short Rolls-Royce shares (2024)

In this article, we are talking exclusively about Rolls-Royce Holdings (RR) - the multinational aerospace, defence and engineering company, and any mention of ‘Rolls-Royce’ is used in that context unless otherwise stated. If you’re looking to get exposure to the synonymous car company, you’ll need to invest in or trade BMW shares – which owns the Rolls-Royce car brand.

How to buy or invest in Rolls-Royce shares

You can get exposure to positive movements in the Rolls-Royce share price by investing in the shares directly, or through speculating on the share price with spread bets and CFDs.

When you invest in Rolls-Royce, you’ll take ownership of the shares and will be granted shareholder rights. This means you might be able to vote on company decisions at the annual general meeting (AGM), and you could receive dividends if the company pays them.

Trading Rolls-Royce with spread bets and CFDs means that you are speculating on the share price with financial derivatives. When trading, you won’t take ownership of the shares, but you will be able to trade with leverage – granting you full market exposure for an initial deposit.

How much would it cost to invest in Rolls-Royce?

Because Rolls-Royce Holdings is listed on the London Stock Exchange, you stand to benefit from our best commission on UK shares:

Our best share dealing commission is available to clients who opened three or more positions on their share dealing account in the previous month. You’ll need to commit the full value of the position upfront, and you’ll take direct ownership of the shares.

If you’d rather speculate on the Rolls-Royce share price with derivatives, you’ll be able to take advantage of the following benefits:

• Get full exposure with a 20-25% deposit on almost all of our tier-one shares¹
• Trade spread bets without paying any tax²
• Hedge your positions with CFDs and offset losses against profits for tax purposes²

Open an account now to get started

How to sell and short Rolls-Royce shares

If you’re an investor, selling Rolls-Royce shares means that you will be closing your position. In doing so, you will relinquish your voting rights and you’ll no longer be eligible to receive dividends – assuming that you sell all of your Rolls-Royce shares.

Shorting Rolls-Royce shares means that you are taking a speculative position on their price falling with spread bets and CFDs. Shorting enables you to generate a profit from a falling market, or you can use shorting to hedge your investment positions against momentary declines in the Rolls-Royce share price – without selling your investment position.

Rolls-Royce shares: the basics

Rolls-Royce Holdings is listed on the London Stock Exchange under the RR ticker. The company is a constituent of the FTSE 100 stock index, which tracks the performance of the 100 largest blue-chip companies listed on the London Stock Exchange.

Rolls-Royce Holdings is the parent company to Rolls-Royce North America, Rolls-Royce AB and Rolls-Royce Deutschland. But, contrary to popular belief, it does not own the luxury car company of the same name – Rolls-Royce – which is wholly owned by BMW. So if you’re seeking to get exposure to the car company, you’ll need to invest in or trade BMW shares.

Rolls-Royce Holdings is a strong stock choice if you are seeking exposure to the aerospace, defence and engineering sectors.

What's the Rolls-Royce business model?

The Rolls-Royce business model is based on a five-point strategy, which is bulleted below as it appears on the company website³:

• Address four global markets
• Invest in technology infrastructure and capability
• Develop a competitive portfolio of products and services
• Grow market share and our installed product base
• Add value for customers through the provision of product-related services

Overall, the five points highlighted above are designed to help Rolls-Royce deliver on their ability to be at the forefront of the aerospace industry and to continue to develop and create the latest technology that the industry relies on.

Rolls-Royce Holdings: share price analysis

You can carry out both technical and fundamental analysis on the Rolls-Royce share price.

Technical analysis looks at chart patterns and price action using technical indicators. The hope is to identify levels at which a stock might be classed as being overbought or oversold.

Fundamental analysis hopes to make sense of whether a stock is currently overvalued or undervalued by looking at company earnings, financial statements and leadership – to name a few.

For a technical analysis of the Rolls-Royce share price, you might want to turn to popular technical indicators such as the parabolic SAR, channel indicators, Williams %R, moving averages or the stochastic oscillator.

To carry out a fundamental analysis of the Rolls-Royce share price, the following metrics might be useful:

• Earnings per share (EPS) shows how much Rolls-Royce makes for each share of its stock. It is calculated as net profit divided by the total number of outstanding shares – and a high EPS could indicate that the stock is undervalued
• Price-to-earnings (P/E) ratio shows how much you would have to invest in Rolls Royce to receive £1 in profit. The P/E ratio is calculated by dividing a company’s share price by its EPS – and a low P/E ratio might show that a company’s stock is currently undervalued
• Return on equity (ROE) is the amount of income that a company is generating relative to the amount of equity it has generated through shareholder investments. ROE is calculated by dividing a company’s net income by its shareholder equity, and multiplying that figure by 100 to get a percentage

Footnotes

¹Deposits on leveraged trades are 20%-25% for 99.14% of tier-one shares. For more information, view our share trading margin rates
²Tax laws are subject to change and depend on individual circ*mstances. Tax laws may differ in a jurisdiction other than the UK
³Rolls-Royce Holdings, 2021