How to Buy Nio (NIO) Stock

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Contributor, Benzinga
December 7, 2023
$5.64
0.24[4.44%]
Last update: 7:59PM (Delayed 15-Minutes)
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Open5.540Close5.650
Vol / Avg.60.295M / 62.591MMkt Cap11.731B
Day Range5.500 - 5.77052 Wk Range5.300 - 16.180

The future of car ownership is changing fast and Nio (NASDAQ:NIO) is leading the way. An automobile manufacturer based in China, Nio focuses on producing electric autonomous vehicles. As the battery pack attempts to overtake the combustion engine and gasoline cars, this EV maker is doing more than invading the EV market. Nio is focused on a supercar that can help growth stocks rise over many of its competitors.

Nio’s self-driving electric SUVs are currently available for preorder. Priced at about $52,200 for the Nio ES6 and $75,500 for the ES8 SUVs, they cost considerably less than Tesla’s (NASDAQ:TSLA) comparable Model X SUV that will set a buyer back around $80,000.

Nio’s innovative ideas and belief that cars will soon be a mobile living space make Nio an exciting player in the auto technology sector. The company launched its 100 kWh battery with flexible battery upgrade plans on November 6, 2020. Electric car sales continued to surge, with companies like Nio taking on Tesla and pushing forward the EV agenda. This is significant since Nio EVs operate on battery unit replacement in lieu of regular charging. 

How to Invest in Nio 

Nio designs, jointly manufactures and sells smart electric vehicles with a focus on artificial intelligence and autonomous driving. The company is also committed to the idea of a more environmentally friendly vehicle, leading to a sustainable future if enough people jump behind the movement — and the wheel of a Nio ES6 or 8. If this appeals to you, investing in Nio now may be in your best interest if you don’t mind the risks. 

Direct Investment 

If you’re looking to invest in Nio without involving a broker, you can explore a few roads: 

  • Direct stock plan: These plans allow smaller investors to buy ownership directly from the company itself. Investors buy in simply by transferring money from their bank account, often for lower than the price of a single stock, meaning investors without a lot of capital can buy fractional shares of a company. 
  • Dividend reinvestment plan: While this plan is similar to a direct stock plan, the company automates the process of buying more stock over the years, usually 4 times per year. This is usually a free service or comes with a small commission fee. 

Brokerage

While it may seem like less of a hassle to skip the middleman, brokers are actually a safer and cheaper option to go with. You might be asking what an online broker is. They’re the ones who facilitate the stock purchase, giving you a convenient place to place orders, check stock quotes and make fast trades. 

Once you pick a broker, you’ll need to open a brokerage account. This may require some personal information and proof of funds. You will also need to provide a method for the funding, including wire transfers and electronic fund transfers. 

Just remember that most brokers charge brokerage fees, including flat trading fees and accounting fees. Some online brokers do now offer commission free trading that would allow you to buy Nio American Depository Receipts (ADRs). These special receipts trade on the NASDAQ stock exchange and allow U.S. residents to purchase foreign stocks otherwise unavailable to U.S. investors.

Pros to Buying Nio Stock 

Nio is all about building the car of the future. With so many scientists looking for ways to step away from fossil-fueled vehicles, Nio might become a big player in the game because this is an avenue consumers are starting to explore. Nio offers direct competition to Tesla and other electrical vehicle (EV) manufacturers.

This year, Nio reported it had delivered 15,959 vehicles in November alone, which consists of 10,545 premium smart electric SUVs, and 5,414 premium smart electric sedans. This represents an increase of 12.6% year-over-year. As of November 2023, it has reached 431,582 NIO vehicles of cumulative deliveries.

China is a big supporter of electric smart cars. The government reduced the subsidies for new energy vehicles late last year, hoping only the “strongest would survive” without government granted funding. While China was mired in the coronavirus outbreak in February of 2020, Nio announced it was in talks with the Hefei city government, a city in southeastern China, which later resulted in a lifeline of $7 billion yuan or approximately $1.4 billion from investors that included state funded entities.

In a post-COVID world, with a range of other issues plaguing society, including climate change, it’s no wonder that EVs are becoming more popular than ever, especially as companies like Nio make EVs more accessible. Home charging is easier than ever, and vehicles such as these may hold their market value better than others.

Cons to Buying Nio Stock 

China has a large market for EVs, with 5% of the domestic automobile and SUV market, but the market is highly competitive since Nio is one of over 400 new energy vehicle manufacturers registered in China. Many of these companies struggled during the coronavirus outbreak due to lack of vehicle sales and interest. 

While Nio is innovative, and its products are promising and exciting such as battery swapping and autonomous driving technologies, they have several competitors sharing the spotlight, including Tesla, Inc., Li Auto (NASDAQ: LI), Xpeng (XPVE) and Geely Automotive (NASDAQ: GELYY). While electric vehicles are definitely in vogue, it seems like the public may not be ready for cars that drive themselves

Another consideration you should keep in mind is the current relationship the U.S. has with the Chinese government after the COVID-19 pandemic. Former President Trump ordered the New York Stock Exchange (NYSE) to delist the stocks of China’s 3 largest telecom companies. 

The NYSE responded by originally agreeing to delist the stocks, although on January 5, 2020, the exchange reversed its decision and now says that it no longer plans to delist the Chinese telecom stocks. To avoid this type of risk, you may want to hold off on investing in Chinese stocks until U.S.- China economic relations improve. As a result, the fuel cell that powers these cars may not keep up with production, and Wall Street may fall in love with another asset in the meantime.

History of Nio’s Stock Price 

Nio issued 88.5 million ADRs and sold them at $17 per share in August of 2020. At the time, the ADRs were sold at an 8% discount to the prevailing market price of Nio stock. At $17 per share, the stock had already rallied significantly from its 52-week low of $2.11 per share.

Taking advantage of the strength of its stock, Nio issued an additional 68 million ADRs on December 17, 2020 at $38 per share. The company plans on using the additional funds to expand their service network and for the research and development of new products. 

NIO currently trades at $37 and is below its all-time high of $66.99. The shares are up 117% over the past year. The stock’s 52-week range is $2.22 to $66.99, which shows price volatility. The stock has rallied during the pandemic and pulled back from its all-time high earlier in the year by 44.7%.

How to Choose the Best Broker for You

It can be stressful when you don’t know where to begin. How do you even invest in Nio? How do you know how much to invest? A broker can help, but you need to find a broker that matches your investment style best. You should also look for a brokerage firm that charges the least amount of money for the services you’re most interested in. 

Compare all the costs of buying, selling and holding stocks through a broker. Remember to compare commissions as well as margin interest and other fees. 

At Benzinga, we can help you find the best stock broker, making the whole process easier to understand and navigate.  

Nio: A Rocky Road Ahead

Nio’s future isn’t as smooth as a ride in one of its electric vehicles, despite the astronomical increase in its share value this year.  

As Nio’s stock trades near its all-time highs, you would probably be wise to wait for a pullback in the near future if you plan on investing in it. Keep in mind that U.S. trade relations with China remain stressed, and the COVID-19 pandemic shutdowns and their resulting adverse economic impact have dampened consumer demand for expensive products like vehicles. 

As the proposed delisting of Chinese telecom companies demonstrates, there may be more risk in buying Chinese stocks like Nio than is readily apparent. Make sure you understand these risks before investing any funds you cannot afford to lose in this company.

Frequently Asked Questions

Q

What is the price target for NIO?

A

The price target for NIO can vary depending on various factors such as market conditions, analyst opinions, and company performance. It is important to note that price targets are speculative and can change over time. It is advisable to consult with a financial advisor or do thorough research before making any investment decisions.

Q

Is it worth buying NIO?

A
Whether or not it is worth buying NIO depends on various factors such as an individual’s risk tolerance, financial goals, and market analysis. It is always recommended to conduct thorough research, analyze the company‘s financials, understand the industry trends, and consult with a financial advisor before making any investment decision.
Q

Is NIO on Robinhood?

A

Yes, NIO is available for trading on Robinhood. Robinhood is a popular online trading platform that allows users to invest in stocks, options, and other financial instruments.