Nio, Inc. NIO became the latest EV manufacturer to make its way into one of the Cathie Wood-run Ark Invest ETFs.
What Happened: Daily trade information released by Ark Invest on Friday showed that its ARK Autonomous Technology & Robotics ETF ARKQ had bought 420,057 shares in Nio. At Nio's closing price of $19.91 Friday, the purchase is valued at $8.36 million.
This accounted for 0.4954% of the total ARKQ holding. EV pioneer Tesla, Inc. TSLA has the highest weighting of 11.5% in ARKQ followed by Kratos Defense & Security Solutions, Inc. KTOS at 8.57%. In comparison, Nio's domestic rivals XPeng, Inc. XPEV and BYD Company Limited BYDDF have weightings of 1.63% and 1.14%, respectively.
Related Link: Nio Reports Q4 Beat, Hints At Reacceleration In Growth In 2022
Why It's Important: Ark Investment focuses on investment ideas that are on the forefront of innovation, possessing disruptive potential. By identifying such ideas early on, the fund aims at providing long-term value to investors.
The fund's Nio pick fits in well with the thesis. The Chinese EV maker is a manufacturer of premium EVs and is an innovator on the technology and services fronts.
The company unveiled at its 2021 Nio Day held in December the ET5 midsize sedan, which comes with AR and VR-native design. The company announced PanoCinema, a panoramic and immersive digital cockpit on the ET5, featuring AR and VR technologies. Nio also said it is collaborating with Nolo to jointly develop the Nio VR Glasses, with ultra-thin Pancake lenses.
The company has also widely popularized battery-as-a-service and is also working on ADAS-as-a-service offering, which allow periodic small payments instead of a big upfront payment, thus making its cars affordable to buyers.
The year 2022 is a catalysts-rich one for the Chinese EV maker, with at least three products due for launch.
Ark Invest's funds haven't really performed well in the past two years, with its flagship ARK Innovation ETF ARKK underperforming the Nasdaq Composite Index.
The inclusion of Nio in ARKQ is an acknowledgement of the company's innovative and disruptive potential. It could give a psychological boost for shares in the near term.
With Wood or not, Nio is poised for a strong year ahead, provided it can execute on its strategies and navigate through macroeconomic and geopolitical risks, which include supply constraints and potential delisting from the U.S.
Nio closed Friday's session down 9.42% to $19.91.
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