The future of car ownership is changing — fast — and Nio is leading the way. A car manufacturer based out of China, Nio has a focus on electric autonomous vehicles. Its self-driving cars are currently available for preorder, coming in at a little over $50,000.
With no real products on the market yet, some investors might be wary when it comes to investing in Nio. But its innovative ideas and belief that cars will soon be a mobile living space make Nio an exciting player in this technology sector.
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 ES8. If this appeals to you, investing in Nio now may be in your best interest if you don’t mind the risks.
If you’re looking to invest in Nio without involving a broker, there’s a few roads you can explore.
- 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.
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 quotes and make fast trades. Here are some of our favorite brokerages:
Commissions$0 $6.95 for OTC Stocks
Once you pick a broker, you’ll need to open an 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 come with brokerage fees, including flat trading fees and accounting fees.
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 oil-fueled vehicles, Nio might become a big player in the game because this is an avenue consumers are starting to explore.
Stocks rose significantly near the end of 2019 when Nio announced an increase in vehicle deliveries. In the 3rd quarter of 2019, Nio delivered 4,799 vehicles, an increase of 35.1% from the 2nd quarter. A reported 12,341 vehicles were delivered in 2019, with founder William Li citing an accelerated growth in orders due to a “more expansive sales network.”
Nio also announced a collaboration with Intel’s Mobileye around that time last year. With the partnership promising to develop automated and autonomous vehicles for Chinese consumers — and eventually other countries — Nio’s stock soared, rising by 24%. Its goal is to bring greater road safety to China. Promising partnerships like these prove that other major investors and companies believe in Nio’s vision, while making it more doable in the near future.
China is also 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.
Cons to Buying Nio Stock
While the Chinese government is promoting electric cars, their citizens don’t seem enthusiastic to purchase these vehicles. Nio is one of 486 new energy vehicle manufacturers registered in China, meaning there’s tough competition. And many of these companies struggled last year due to lack of sales and interest.
Nio is far from profitable at the moment. As of September 2019, Nio only had $274.3 million in cash remaining. That’s a big drop from the $1.123 billion it reported at the end of March 2019. Near the end of 2019, Nio announced the possibility of a $1 billion deal, boosting its stocks. But the report turned out to be exaggerated. In late December, Nio admitted it could not get through 2020 without additional cash.
While Nio is innovative and its product is promising and exciting, they have competitors taking the spotlight, including Tesla, Inc. While electric vehicles are definitely in, it seems like the public is not ready for cars that drive themselves.
History of Nio’s Stock Price
Nio’s stock is currently down 47% from where it was at the beginning of last year, most likely due to money woes and disappointing January deliveries. And it’s only expected to slow down more over the next few months.
At publication the closing stock price for Nio is $3.60. The all-time high for Nio was $11.60 in September of 2018. The company’s 52-week high stock price is $10.64, 180% above the current share price. The average Nio stock price for the last 52 weeks is just $3.60.
At the end of last year, Nio saw a surge in stock prices when it announced a $1 billion deal. Now investors aren’t sure that’s happening, so the price has significantly plummeted. In fact, Nio needs a deal like that to stay afloat in 2020, so people with an interest in this innovation are waiting to see if that happens.
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. It’s full of twists and turns, maybe even potholes. And, maybe some dead-ends. Nio has a lot of innovative ideas and smart solutions, but it seems like the world may not be ready for the solutions Nio offers. If you’re an investor looking for a risk, Nio may have a big payout if it finds the right investors to keep it afloat in 2020.