Nio Inc. is a Chinese multinational automobile manufacturer headquartered in Shanghai, specializing in the design and development of electric vehicles. The company also pioneers the creation of battery-swapping stations for its vehicles, offering an innovative alternative to conventional charging stations.
Having garnered over $5 billion from investors, Nio announced in 2021 its ambitious plans to expand into 25 different countries and regions by 2025.
If you’re considering investing in NIO, there are two primary approaches: you can either purchase the stock directly or invest in ETFs. This guide will provide you with all the information you need to get started.
Table of Contents
How to Buy NIO Stock
Step 1: Open a Brokerage Account
Nio’s American Depository Receipts (ADRs) represent ownership in shares of a foreign company, in this case, Nio. ADRs are traded on U.S. stock exchanges and offer a way for investors to access foreign stocks without dealing with international markets directly.
To invest in Nio stock, you need to open a brokerage account. If you don’t have one, you can check out our curated list of the best online brokers to help you start your search.
Online brokers are known for their convenience and often lower fees, while full-service brokers provide a broader range of services, including estate and retirement planning. Make sure to evaluate account minimums and associated fees when making your choice.
- For long-term retirement savings, consider a Roth for tax advantages. If you’ve held your Roth IRA for at least five years, you can withdraw money without paying taxes or penalties. Unlike a Traditional IRA, a Roth IRA doesn’t have mandatory minimum withdrawals.
- If you’re saving for general goals like building wealth or a home down payment, a taxable investment account might be a more viable option. Unlike an IRA or a 401(k), you can withdraw your money at any time, for any reason, with no tax or penalty from a brokerage account.
Step 2: Research Nio’s Fundamentals
Before investing in any company, including Nio, it’s important to do thorough research. Here’s what you should do:
Access Nio’s financial reports, like the annual 10-K and quarterly 10-Q filings. You can find these reports on Nio’s investor relations website or the Securities and Exchange Commission’s (SEC) database.
Supplement your research with analyst reports from reputable third-party firms like Morningstar and gather insights and updates about Nio’s performance from experts at Forbes Advisor. Brokerage firms, including those offering major stocks like Nio, also provide valuable research and commentary. This will give you insights into Nio’s financial health, growth prospects, and potential risks.
Step 3: Decide How Much to Invest
Before you start investing in Nio stock, set your investment budget. Consider these factors:
- Budget: Make sure your investment doesn’t interfere with your monthly expenses, emergency funds, and retirement savings.
- Nio’s Stock Price: Understand its valuation and decide on the investment amount. Nio’s stock price fluctuates, but some brokerages allow you to buy fractional shares.
- Investment Strategy: Decide between lump-sum purchase or regular investments using dollar-cost averaging.
- Portfolio Integration: Assess Nio’s role in your overall investment goals. While Nio may appear enticing as an investment in the EV market, prudent investors always prioritize diversification.
Step 4: Place an Order
With your research complete and investment amount determined, it’s time to place your order for Nio stock. Here’s how:
- Access your chosen brokerage account’s trading platform.
- Input Nio’s ticker symbol, “NIO,” and specify the number of shares you wish to purchase.
- Choose the type of order you want to place, such as a market order or limit order.
Keep in mind that Nio’s American Depository Shares (ADSs) are traded on the New York Stock Exchange (NYSE) under the ticker symbol “NIO.”
Trading hours typically run from Monday through Friday, 9:30 a.m. to 4:00 p.m. EST, but some online brokers offer after-hours trading, extending your trading options beyond regular hours.
Step 5: Monitor Nio’s Performance
To effectively manage your investments, set up a routine to review your portfolio’s performance:
- Schedule regular check-ins, whether monthly, quarterly, or annually, to ensure the company continues moving in a positive direction.
- Compare Nio’s performance to broader market benchmarks like the S&P 500 and China Electric Vehicle Index to gauge how it fares in the broader market context.
- Watch Nio’s financial data in its public filings to assess how the company handles its finances over time.
How to Sell NIO Stock
Selling Nio stock is a straightforward process:
- Access your brokerage account’s trading platform.
- Input the number of Nio shares you intend to sell.
- Decide whether you want to sell at the current market price or set a specific target sales price for the future.
Bear in mind that if you sell at a profit, you will be subject to capital gains taxes. The tax rate may vary based on the duration for which you held the shares. Therefore, it’s advisable to consult with a tax advisor before making any changes to your investment portfolio.
Other Investment Options
While buying individual Nio stock shares is one way to invest in the company, there are alternative investment options that offer diversification and exposure to Nio and the broader EV market:
1. Exchange-Traded Funds (ETFs): ETFs are investment funds that typically track the performance of a specific index or group of assets. Several ETFs include Nio stock in their portfolios, allowing investors to gain exposure to Nio and other companies simultaneously. For instance, you can consider investing in the Vanguard FTSE Emerging Markets ETF (VWO) or the KraneShares MSCI China Clean Technology Index ETF (KGRN) to diversify your investments in the EV sector.
2. Mutual Funds: Mutual funds pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. Some mutual funds focus on the electric vehicle industry, and by investing in them, you can indirectly gain exposure to Nio and other related companies.
Learn more: Best Investment Options
