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Headquartered in Shanghai, China, Nio Inc. is a company that designs, manufactures, and sells electric vehicles. The company mainly serves the Chinese market, but it is steadily expanding to global markets. The company focuses on premium electric vehicles, a niche it pioneered and continues to lead in China. Its bestselling products so far, as of November 2021, include the ES6 (a 5-seater SUV), the EC6 (a coupe version of the ES6), and the ES8 (6/7-seater SUVs). Nio was founded by William Li in 2014.
The brand name Nio was inspired by the Chinese name, Weilai, which translates to ‘Blue Sky Coming.’ The name reflects the company’s ambition and drive to be environmentally friendly. Nio has always been driven by innovation, and it actually describes itself as a ‘user brand’ rather than a ‘car brand.’ The culture of innovation is manifested throughout its ecosystem. Its cars are designed to provide a mobile living experience, and they feature the most advanced in-car AI assistants in the industry. The company also offers a wide range of charging solutions to its customers, including the unique Power Swap, a battery swapping service it pioneered. Its famous Nio Houses have also redefined showrooms, making them more like clubhouses where users can meet up, socialise and try new products.
The company’s future prospects are bright, just like its industry. But Nio is still very much a start-up, and the company has yet to turn in a profit (as of November 2021). However, if it keeps up its momentum, it is expected to celebrate this important milestone very soon.
Nio Inc. is listed as an ADR (American Depositary Receipt) on the NYSE, trading under the ticker symbol NIO. The stock is categorised in the Consumer Cyclicals sector, under the Auto Manufacturers industry.
NIO Stock History
Nio Inc. went public in September 2018 with an IPO price of $6.26. Despite the company’s promise, NIO stock got off to a subdued start. The stock remained stagnant and drifted lower to its all-time low at circa $1.50 in October 2019.
The fortunes of the stock then turned in 2020, and NIO embarked on a sharp rally that saw it peak at its all-time high around $67 in January 2021. Concerns about production and chip shortages in the electric vehicle industry then triggered a market correction for the stock, which dipped to around the $30-area. But NIO weathered the storm and has since recovered to trade above $40 as of November 2021.
Nio has never paid a dividend, and there are no indications that it will start soon. Nonetheless, NIO is classified as a growth stock that has the potential of rewarding investors through high stock prices in the future.
How to Trade NIO Stock
Here are the factors to consider when trading NIO stock:
- Regulatory and Taxation Policies – Nio benefits from a favourable regulatory environment and government support. The Chinese government offers generous subsidies and lower tariffs on imports needed by the electric vehicle industry. The industry also benefits from a favourable tax regime. At the very least, these policies help Nio gain a competitive edge both locally and abroad. But a change in stance or loosening of support by the government could be really impactful to the bottom line of the electric car maker.
- Global Economic Conditions – Nio is focused on the premium electric vehicle market. This means that the demand for its products is highly dependent on the prevailing local and global economic conditions. Generally, strong economic conditions will boost the demand for Nio cars and inspire the NIO stock higher, whereas weak economic conditions will limit the demand for its cars which could trigger lower NIO stock prices.
- Competition – The future of cars is electric and autonomous. This is a red-hot industry, and competition is very fierce and always evolving. Competition is based on pricing, style and design, product features, new product rollout, product performance, and technological innovation. In particular, Nio faces tough competition from fellow Chinese start-ups such as Xpeng and Li Auto. The company also faces competition from pioneer Tesla both locally and abroad. There is also competition from well-capitalised traditional carmakers such as BMW, Toyota, Lexus, Fiat, and Porsche that are actively penetrating the electric vehicle market.
- Periodic Earnings Reports – For a company that has huge debts and is yet to turn a profit, its earnings reports are closely monitored by investors. Nio’s fiscal year runs from January to December, and the company releases periodic earnings reports (quarterly, semi-annual and annual) to update investors on its business performance in the market. Some of the metrics to watch out for include units sold, sales by model, and capital expenditures. Positive numbers tend to inspire higher NIO stock prices, whereas negative figures could trigger lower NIO stock prices.
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