How to buy NIO stocks in 2024

1. eToro

eToro is a social trading and investment platform that allows users to trade a variety of assets, including cryptocurrencies. The platform is designed to be user-friendly and intuitive, making it a good choice for those new to investing. eToro also offers some features that can be useful for more experienced investors, such as the ability to copy other traders' portfolios. You can read our full eToro review here.

Security and Privacy

eToro takes security and privacy seriously, offering features such as 2-factor verification and encrypted passwords to keep user accounts safe. The platform also offers a strict anti-money laundering policy to protect users from fraud. To prevent abuse of the platform, they have put several security features in place, such as data loss prevention and restriction of access based on IP address. When a user invests, an additional security feature blocks the transaction from being executed if the account is linked to a potentially fraudulent user. In addition, they employ top vendors, web solutions, and firewalls, constantly on the alert to block a possible cyber-attack.

They take users’ privacy of utmost importance and never share their personal information without their consent.

Fees and Features

One of the most attractive features of eToro is that it is a multi-asset platform which gives access to over 2,000 financial assets like stocks, ETFs, indices, Cryptocurrencies and many more. eToro offers users Free Insurance that would cover claims in case of insolvency or an event of misconduct. Another feature that makes this platform one of the best around is the social trading feature. You can join a community of 20 million traders all around the world and connect with like-minds to shape your trading decisions. Lastly, the CopyTrader feature allows you to use the performance of some seasoned investors to know the one to replicate.

eToro offers 0% commission when you open a long, non-leveraged position on a stock or ETF with no management fees or deposit fees. However, the platform charges an inactivity fee of $10 per month if you don’t trade for 12 months. There is also a low fixed $5 fee for withdrawals.

Pros

• Security and Privacy
• Low fees and commission
• Copytrading
• Social trading

Cons

• High inactivity fee
• Limited customer service

2. Capital.com

Capital.com offers a variety of investment products and services to its clients. These include stocks, indices, commodities, shares, crypto, and forex. Capital.com has a wide range of clients, including retail investors, institutional investors, and high-net-worth individuals. You can read our full Capital.com review here.

Security and Privacy

Capital.com is licensed by several top regulatory bodies, including the FCA, CySEC, ASIC, and the FSA. This indicates that Capital.com customers are well safeguarded and that the platform adheres to strict guidelines to guarantee that consumer information is secure and hidden. In addition, Capital.com’s compliance with PCI Data Security Standards is another way it safeguards its customers’ information.

Every deposit made by retail customers is protected by the Investment Compensation fund according to regulatory guidelines.

Fees and Features

With CFD trading, customers have access to over 6,000 markets with tight spreads. Capital.com offers educational materials that can help customers to make more informed decisions. Another feature Capital.com offers is Spread betting. This gives customers access to speculate on upward and downward moves on over 3000 markets. The broker provides a tool powered by AI in its mobile trading app that offers individualized trading insights by utilizing a detection algorithm to uncover different cognitive biases.

Capital.com charges no fees on deposit, withdrawal, commission or inactivity.

Pros

• Tight spreads
• 0% commission with no hidden charges
• Artificial Intelligence
• Risk management tools
• Educational materials

Cons

• Overnight fees
• Mostly restricted to CFDs

3. Skilling

Skilling is an online trading platform that offers users the ability to trade a variety of financial assets, including forex, CFDs, and cryptocurrencies. The platform is designed to be user-friendly and provides traders with all the tools and resources they need to start trading. Skilling also offers a demo account so that users can practice trading before they start trading with real money. You can read our full Skilling review here.

Security and Privacy

The security and privacy of the Skilling online trading platform are taken very seriously. All information entered into the platform is encrypted and stored securely. Only authorized personnel have access to this information. In addition, the platform uses two-factor authentication to ensure that only authorized users can access account information. Skilling is regulated by the Cyprus Securities and Exchange Commission (CySEC), which means customers can rest assured about the security of their assets.

Fees and Features

Skilling has four different platforms; Skilling Trader, Skilling cTrader, Skilling MetaTrader 4 and Skilling Copy. Skilling Trader is designed for traders on all levels with access to all the tools needed for trading analysis. Skilling cTrader on the other hand is designed for advanced traders with a focus on order execution and charting capabilities. MetaTrader 4 is a forex and CFDs trading platform with a very versatile and easy-to-customise interface. Skilling Copy is a copy trading platform which allows members to have access to follow or copy trading strategies of seasoned traders at a fee.

Skilling does not charge any fee for inactivity, deposit or withdrawal. However, there are commission charges on FX pairs and Spot Metals on the Premium account type. These charges start from $30 per million USD traded.

Pros

• Reliable 24/5 customer support
• Over 1000 trading instruments
• Superb licensing and regulation
• Demo account

Cons

• Not enough educational materials
• High Spreads
• Service is unavailable in many countries including the US and Canada.

Investors should have a thorough understanding of a company’s history, business strategy, revenue sources, business model, key financial metrics, and the recent performance of its stock to make informed investment decisions. The following sections provide you with vital information about the NIO’s operations:

NIO History

NIO was founded in November 2014 by Chinese investor and entrepreneur William Li. In 2016, the company introduced its first “EP9” electric sports car with a price tag of £2,500,000 and a range of 427km (or 265 miles) per charge. However, the car was produced in limited quantities. The company’s first mass-produced electric sports utility vehicle (SUV), the ES8, was introduced in December 2017. The ES8 is a full-size, 5-door, 7-seat electric vehicle with an aluminium alloy body. Deliveries for the SUV started in June 2018.

A 5-seater electric SUV, the ES6, was launched in December 2018, and the deliveries to customers started in June 2019. A 5-seater coupe SUV named EC6 was unveiled in December 2019, with deliveries starting from September 2020. In January 2021, the automaker introduced its first-ever electric sedan in Chengdu, China, which will compete with Tesla's Model S sedan in China. The sedan boasts an autonomous driving system called Aquila.

NIO entered the overseas market in 2021 as a batch of ES8s arrived in Norway, which will be followed by the launch of the ET7 electric Sedan in 2022.

NIO raised $1 billion in the IPO on the New York Stock Exchange in September 2018 as it issued American Depositary Receipts (ADRs) at $6.26 each.

What Is NIO’s Strategy?

NIO’s strategy is to introduce innovative and advanced technology in the automotive industry. The company has expertise in autonomous driving and battery swapping technologies. Its battery-as-a-service (BaaS) model allows users to recharge, swap, or upgrade their vehicles’ batteries by subscribing to the service, which lowers the vehicle’s purchase price while providing users with reliable battery performance and flexible upgrade options. The company operates a network of more than 170 strategically installed battery swap stations across 74 cities.

The company aims to advance its NIO Autonomous Driving (NAD) system, develop in-house capabilities, and focus on rolling out industry-leading features to its customers. According to the company, the NIO Pilot autonomous driving system has several innovative features that include navigation on the pilot (NOP), forward collision warning, blind-spot detection, automatic high beam, and rear cross-traffic alert. The NIO Pilot system contains built-in algorithms that gather data from the entire fleet and analyse the data using AI to develop new features. The company plans to offer a monthly subscription for its NIO Autonomous Driving (NAD) system in 2022.

NIO’s strategy is to undertake in-house research and development activities to develop software and hardware for quickly rolling out new technologies to its customers. NOMI, the NIOs digital in-car companion, helps drivers communicate and interact with the car’s various functions. The company has firmware-over-the-air (FOTA) and software-over-the-air (SOTA) capabilities that allow it to remotely install critical updates, fix bugs, and upgrade firmware.

How Does NIO Make Money? 

NIO earns the majority of its revenue from the sales of its vehicles. A small portion of its revenue comes from products and services bundled together with the sale of vehicles, such as energy packages, power services solutions, power swap services, one-click-for-power services, and monthly service fees.

How Has NIO Performed in Recent Years?

The NIO ADR gained over 102% between September 14, 2020, and September 10, 2021, as it climbed from $18.73 to $37.98. It has gained around 284% since its IPO on 12 September 2018, with the highest point ($61.95) attained on January 22, 2021.

NIO ADR 3-year chart (starting from September 14, 2018): Source: Google Finance

Fundamental analysis refers to analyzing the company’s financials to determine the intrinsic or fair value of its stock in relation to its market price. The most common metrics investors examine are revenue, revenue growth rate, income growth rate, earnings per share, price-to-earnings ratio, dividend yield, debt to equity ratio, and free cash flow. 

NIO’s Revenue

Revenue denotes the monetary value of sales a company has made during a period. Healthy, all-round sustainable growth in revenue can lift the stock, while a decline in the revenue growth rate can send the stock sliding downward. You can find a company’s revenue figure on the income statement issued along with other financial statements.

NIO reported revenue of RMB 8,448.0 million or USD $1,308.4 million in Q2 2021, which was 127% higher than in Q2 2020 and 5.8% higher than in Q1 2021.

NIO’s Earnings-per-Share

The EPS or earning per share metric is calculated by dividing the net profit or loss by the total number of common shares outstanding, and it represents the profit or loss available for each outstanding share. For example, if a company’s net profit is $100 million and the number of shares outstanding stands at 10 million, the earnings per share would be $10 per share ($100 million / 10 million). If a company reports loss, the metric will calculate loss per share and the resultant figure will be negative.

NIO Inc. reported an RMB 0.42 or US$ 0.07 net loss per ADR for the second quarter of 2021.

NIO’s P/E Ratio

A company’s P/E or price-to-earnings ratio is calculated by dividing the market price of its shares by the earnings per share. The ratio determines the multiples a stock trades at in comparison to the earnings available for each share. For example, if a stock is trading at $50 and the stock’s EPS is $10, the P/E ratio of the stock would be calculated as 5x (five times). In other words, we can say that the stock’s market price is 5 times the earnings available for each outstanding share. A stock with a higher P/E ratio in comparison to its peers is considered overvalued or expensive, and vice versa.

NIO’s P/E ratio on June 30, 2021, at the end of Q2, stood at -760x, which is calculated by dividing the ADR price on 30th June ($53.2) by the loss per share of $0.07.

NIO’s Dividend Yield

Companies often distribute a portion of their earnings to their shareholders in the form of cash, which is called a cash dividend. Companies can also announce additional or bonus shares as stock dividends. A company’s board of directors declares the amount of dividend and decides whether to pay out the dividends or reinvest the earnings in the company.

The dividend yield is calculated by dividing the annual dividend paid by the current share price. For example, if a company paid out annual dividends of $5 per share and the current stock price is $50, the dividend yield would turn out to be 10%. Investing in high dividend yield stocks can earn investors a higher return on their investments in addition to any upside gains. 

NIO is a growing company and is yet to make a profit, so it has not yet paid out any dividends. 

NIO’s Cash Flow

A company’s cash flow statement gives you an idea about the inflows and outflows of cash. It also shows the amount of cash and cash equivalents a company holds at any specific time. The cash flow statement is divided into three parts: cash flows from operating activities, cash flows from investing activities, cash flows from financing activities. A company with high cash inflows can use the cash for expansion activities and other profitable ventures without incurring financing costs by borrowing money.

As of June 30, 2021, NIO Inc. had cash and cash equivalents of RMB48.3 billion or US$7.5 billion.

Why Buy NIO Stock?

NIO Inc. is a high-growth company involved in the capital-intensive electric vehicle business. The company has already launched several successful products and has grabbed around 20% of the all-electric SUV market in China. Here are three reasons to buy and hold NIO stock:

• NIO Inc. has been developing new electric vehicles, and sales are growing at a rapid pace. The company doubled its EV sales in June 2021 as it delivered over 8,000 vehicles of various models. The company plans to launch three new EVs in 2022, which can give it a chance to increase its revenue as it would target different types of customers with its new offerings.
• NIO Inc. has entered the European market by launching the ES8 electric SUV in Norway, with plans of launching the ET7 sedan in Germany in 2022, which can help acquire market share in the European market as well.
• The company’s stock has had an explosive run since its IPO, which shows that investors are upbeat about the company’s future even though the company is yet to achieve profitability.

You need to consider the following important points before buying NIO stock:

1. Understand the Company 

You need to understand the company’s business model, strategy, competitive environment, strengths, weaknesses, opportunities, threats, and financial metrics to properly assess its prospects. Having a thorough understanding of the company will help you to enter the market or liquidate your position at the right time(s), to earn higher returns on your investment.

2. Understand the Basics of Investing

Understanding the basics of investing will equip you with the necessary tools to make low-risk investments while giving you a chance to generate higher returns. You need to understand the concept of creating a diversified portfolio — a collection of uncorrelated stocks — that will reduce your overall portfolio risk. A well-diversified portfolio of stocks will ensure that even if a stock performs poorly, your overall portfolio is not affected and your risk is reduced. 

Similarly, if you are into short-term trading, you should always employ risk management techniques and apply a stop loss to cap your downside risk. You should calculate your position size in such a way that you don’t risk more than 1% to 2% of your account on each trade.

3. Carefully Choose Your Broker

Even with the right trading skills, you can still struggle to achieve success if the services of your broker are not up to the mark. You should choose a broker that:

• Offers you access to an advanced online trading platform with plenty of technical indicators.
• Lets you trade on smartphones, laptops, or tablets across all operating systems.
• Charges low trading and commissions, which will lower your trading costs.
• Allows you to employ risk management techniques through placing different types of orders.
• Is regulated by the local regulatory authorities so that the risk of getting defrauded is eliminated.

4. Decide How Much You Want to Invest

The amount of money you invest should depend on your investment objective, risk tolerance, investment horizon, and capital. If you are in your twenties and want to save for your retirement, you can allocate a major portion of your funds in stocks as you can generate higher returns by assuming higher risk because of your long-term investment horizon. However, if you are closer to your retirement, you would have a low risk tolerance as you’d want to generate stable returns while preserving your capital. 

You should follow the basic principle of investing: do not put all your eggs in one basket. Do not invest all of your money in a single stock no matter how lucrative the opportunity sounds. Investing all your money in a single investment avenue can give you higher returns but at a cost of assuming a higher risk of losing money.

5. Decide on a Goal for Your Investment

Stating a firm investment goal allows you to set your investment strategy accordingly. An aggressive goal of achieving a 50% return on your investment would involve taking on higher risks whereas aiming for a more modest return of 10% would require a comparatively low-risk trading strategy. The key is to set up realistic goals that could be achieved by assuming low risk.

NIO Inc. has quickly become one of the prominent players in the electric vehicle market due to its recent successes in developing popular SUVs and sedans. The company intends to generate additional revenues from its battery-as-a-service (BaaS) model, autonomous driving systems, and other subscription fees. The company plans to launch in five countries in Europe in 2021, starting with Norway where it has already introduced its ES8s SUVs. The company is already faring well in China as it achieved record sales of over 8,000 units in the single month of June 2021. The company has bright prospects as there is plenty of room for growth in the EV industry. 

If you want to buy NIO ADRs, you should open an account with a stockbroker. You will have to submit an online form and upload your identification documents, such as proof of residence and your ID card, on the broker’s website. After verification of your documents, your account will most likely be created in three business days, if there is no discrepancy in your documents. You can then fund your account using any of the popular funding methods: Paypal, credit or debit cards, e-wallets, and wire transfers.

If you want to explore other interesting stocks, you can read our other pieces on different stocks on our website. We have covered different stocks for you to make your investment decision easier.