How to Trade NIO Shares: NIO Trading Guide

Few people might realise that NIO Inc.'s founder, William Li, is often compared to Elon Musk, the CEO of Tesla (TSLA), in terms of innovation and this isn't just a coincidence. Both Li and Musk are visionary leaders pushing the boundaries of electric vehicle (EV) technologies. This article provides insights into NIO's story, factors affecting NIO’s prices and the various aspects of trading NIO shares.

Main Points:

• NIO Inc., originally known as NextEV, is a key player in China's EV market. The company is involved in the manufacture and sales of premium smart electric vehicles.
• In 2018, NIO went public on the NYSE and was valued at $6.4 billion upon listing.
• NIO shares are traded as American depositary shares (ADSs) on stock exchanges in the US.
• While trading NIO shares involves short-term speculation through derivatives like CFDs, investing in NIO shares entails buying and holding the stock for long-term gains and potential dividends.

What Is NIO Inc?

NIO Inc. formerly known as NextEV, is a prominent player in China's rapidly growing electric vehicle (EV) market. The company operates across the entire EV value chain, encompassing the design, development, manufacturing, and sales of premium smart electric vehicles. Their focus extends beyond simply vehicle production to investment in next-generation technologies for AI driving, electric powertrains, and battery development. This comprehensive approach has positioned NIO in comparison to Tesla within China.

What Are NIO Shares?

NIO shares represent units of ownership in NIO Inc. The company issues stocks for individuals and investors to own shares of the company. Due to NIO's leading role in electric vehicle manufacturing, its stock has become one of the most popular financial instruments in the world. Although NIO is a company that's not based in the United States, it can be traded on US stock exchanges as American Depositary Shares (ADSs) instead of common stock.

ADSs are a type of equity shares specifically designed for companies based outside of the US. Through this financial derivative, traders and investors in the US can trade shares of non-US companies on US exchanges.

What Is NIO Shares Trading?

‘NIO’ is the ticker symbol used to represent NIO Inc. on the New York Stock Exchange. Just like other popular shares and financial instruments, the share price of NIO Inc. provides opportunities for traders to speculate on its fluctuating prices.

NIO shares trading involves buying and selling the share prices of NIO Inc. with the intention to profit from its rising and falling prices. If you expect the price of NIO shares to trend higher, you can open a long position to potentially profit from its bullish price movement. Conversely, if you anticipate the price of NIO shares to decline, you can open a short position to profit from its bearish price movement.

A Timeline of NIO’s History

Since the inception of NIO Inc., a series of significant events have occurred and are outlined as follows.

• 2014: The journey of NIO began in November 2014 under the name NextEV. It was founded by the Chinese entrepreneur William Li. The company attracted early-stage funding from prominent firms like Tencent, Lenovo, and TPG.
• 2016: Following the unveiling of the EP9 supercar by NextEV in 2016, the company established “NIO” as its luxury brand specifically for premium electric vehicles. The EP9 supercar featured strong driving performance, attractive design, incredible acceleration, and first-class electric powertrain technology.
• 2017: NIO completed the construction of its entire manufacturing infrastructure. The company also opened its first House in Shanghai to showcase the company's products and engage with customers before the official launch of its production vehicles.
• 2018: Li Bin rang the famous bell in New York. He took the company public on the New York Stock Exchange (NYSE) on the 12th of September 2018 at $6.26 per share. The IPO raised $1bn and gave the company an initial valuation of $6bn. Although the Chinese government strictly restricts foreign investment in certain Chinese companies. However, NIO was able to raise foreign capital because it was structured as a Variable Interest Entity (VIE).
• 2019: Halfway through 2019, NIO delivered its second model, the ES6. The model debuted CATL’s low-cobalt batteries (“NCM8111”), putting them on par with Tesla in terms of efficiency. However, by the end of the year, the value of NIO stock had dropped to around $1 per share.
• 2020: To facilitate car sales, NIO received another $1 billion in funding from new Chinese investors in April 2020. The same year, stock prices surged to unprecedented levels such that at a certain point, Tesla’s market value alone was higher than the next 20 global carmakers combined.
• 2023: NIO debuted its executive flagship ET9 model which will begin delivery possibly in 2025.
• 2024: At the end of March 2024, NIO had delivered a total of 479,647 vehicles, completed the installation of 2,439 Power Swap Stations, and connected 21,846 chargers, including over 1.5 million non-NIO chargers worldwide.

Factors Affecting NIO’s Price Movement

Several factors influence the price movement of NIO's stock. They include the following:

1. Financial Performance: Investors closely monitor NIO's financial reports, including revenue, earnings, profit margins, and cash flow. Strong financial results can trigger investor confidence in NIO stock and boost the stock price.
2. EV Industry Trends: The overall performance of the electric vehicle (EV) industry can impact NIO shares. For example, positive industry trends, such as rising EV sales figures or technological advancements, can instil investor optimism in NIO's future, potentially driving up the stock price.
3. Competition: Players within the EV market, particularly from other Chinese manufacturers, can directly or indirectly exert influence on NIO’s market value based on NIO’s ability to compete effectively in terms of technology, features, and brand recognition.
4. Innovation: Developments in NIO's electric vehicle technology, battery capabilities, and autonomous driving features are closely watched by investors. Breakthroughs in these areas can lead to positive investor sentiment and potentially increase NIO stock prices.
5. Regulatory Policies: Government policies, incentives, and regulations related to electric vehicles and clean energy can influence NIO's operations and market access. Favourable policies can create a supportive environment for the company, potentially impacting the stock price positively.
6. Global Forces: Trade tensions, currency fluctuations, and broader geopolitical events determine investors' risk tolerance and market sentiment, consequently impacting the value of NIO shares.

How to Trade NIO Shares CFDs

Understanding NIO Shares CFDs

By trading contracts for differences on a company’s share price, traders and investors can gain exposure to the price movements of a company’s shares without owning the actual stock itself. In the context of NIO Inc., the CFD derivative of the company’s share price is NIO shares CFDs. They present opportunities for traders to potentially profit from the difference in the opening and closing prices of their trades.

NIO Shares CFDs Long and Short Positions

Traders may open either long or short positions on NIO shares CFDs. If you take a long position on NIO shares CFD, you are essentially speculating that the price of the underlying asset (NIO shares) will appreciate so that you can possibly make a profit. In contrast, a short position on NIO shares CFD means that you expect the price of NIO shares to decline in value so that you can potentially make a profit.

Position Sizing and Number of Shares

Position sizing in CFD trading refers to the quantity of the underlying asset controlled in each trade. However, in the context of shares CFDs, a unit of 100 shares of a certain stock is equivalent to 1 standard contract size of a CFD trade.

For example, if you buy 300 shares of NIO CFD, you are essentially trading an equivalent of 3 standard contract sizes.

Example of NIO Shares Long and Short Position

Going Long NIO Share CFD

Assume NIO's current buy price is $30.00 and you expect NIO's share price to rise. If you open a buy position of 200 NIO shares CFDs and you exit your trade as the share price climbs to $35.00. Your profit will be $1,000 profit.
Profit Calculation: ($35.00 - $30.00) x 200 CFDs = $1,000

If your prediction is wrong and you close your trade at a lesser share price of $28.00. You will incur a loss of $400.
Loss Calculation: ($30.00 - $28.00) x 200 CFDs = -$400

Going Short NIO Share CFD

Assume NIO's current sell price is $30.00 and you expect NIO's share price to decline. If you open a sell position of 200 NIO shares CFDs and exit your trade at $25.00. You will realise a profit of $1,000.
Profit Calculation: ($30.00 - $25.00) x 200 CFDs = $1,000

If your prediction is wrong and you exit your trade at a higher share price of $32.00. You will incur a loss of $400.
Loss Calculation: ($30.00 - $32.00) x 200 CFDs = -$400 loss.

Difference Between Trading NIO Share CFDs and Investing in NIO Shares

Trading and investing in NIO Inc. are two common means to gain exposure to the price movement of NIO shares. The difference between trading NIO CFDs and investing in NIO shares is provided below:

Trading NIO Share CFDs	Investing in NIO Shares
Traders do not need to own the NIO shares	Investors buy and hold NIO shares
Trading NIO means speculating for short-term gains daily, weekly or monthly	Investing in NIO aims for long-term appreciation and dividend returns
Trading NIO involves speculating on its financial derivatives like Contracts for differences (CFDs)	Investing in NIO involves directly buying the stock
Trading NIO requires less initial capital due to leverage. Leverage can magnify both profits and losses	Leverage is usually not available for investing
Traders can lose more than their initial margin	Investors are limited to their initial investment

Why Might NIO Be Important to Traders?

NIO shares hold significant importance for traders due to several factors:

• NIO is a prominent player in the electric vehicle (EV) industry. This makes its shares a valuable asset for investors and traders.
• Traders often view NIO shares as a proxy for market sentiment and trends within the EV industry.
• The relatively low share price of NIO compared to other EV companies like Tesla makes it accessible to a broader range of individual investors and traders with smaller portfolios.
• Supportive efforts from the Chinese government towards electric vehicle adoption and its investment in NIO add credibility and potential stability to the company's future performance.
• Investors are drawn to invest in NIO because the company’s customer-centric approach to innovation may increase the chances of success.

NIO Shares Trading Hours

NIO stock trades on the New York Stock Exchange, Singapore Stock Exchange and Hong Kong Stock Exchange. The trading period for NIO shares on the NYSE is between 9:30 AM and 4:00 PM Eastern Time (ET). However, NIO can also be traded before and after the actual market hours, but this is usually done electronically and not on the NYSE.

On the Plus500 webtrader platform, traders can observe the price movement of NIO shares in real-time and trade from Sunday at 10:00 PM CET to Friday at 10:00 PM CET.

*Please note that trading platform hours are subject to the individual operator.

How to Analyse NIO Shares CFDs

Trading NIO shares CFDs requires a comprehensive analytical approach that encompasses the technical, fundamental and sentiment aspects of the company’s share price.

• Technical Analysis of NIO Share Price
  This involves analysing the historical price movement of NIO shares to predict future market trends. Analysing NIO share CFDs with technical analysis may involve the following:
  1. Identifying Chart Patterns: recurring patterns of NIO's price charts, such as support and resistance levels, trendlines, and chart formations, can be identified to anticipate potential price movements.
  2. Utilising Technical Indicators: The use of technical indicators like Relative Strength Index (RSI), Moving Averages, or Stochastic Oscillator can serve as useful tools to assess momentum, trend direction, and overbought or oversold conditions of NIO's share price.
  
  
• Fundamental Analysis of NIO Share Price
  This involves evaluating the intrinsic value of NIO shares by considering either of the following. Analysing NIO share CFDs with fundamental analysis may involve the following:
1. Financial Statements: Studying NIO's financial statements, such as net revenue, profit and loss statements, and cash flow statements, can help to assess its financial performance and price stability.
2. Economic Factors: Analysing sector performance, macroeconomic indicators, and regulatory changes that may impact NIO’s business can uncover whether NIO has a supportive economic environment or not.
3. Competitive Analysis: Reviewing NIO’s competitors' market share and product offerings will help to understand NIO's competitive position within the electric vehicle market and the industry trends.

Steps to Buy and Sell NIO Shares CFDs with Plus500

To trade NIO shares CFDs, you may follow these steps:

• Open a real or demo trading account to get started.
• Log in to the Plus500 app or WebTrader platform.
• From the instruments dropdown, locate and choose ‘NIO’ among the popular shares.
• Conduct a thorough analysis of the NIO share price movement and determine whether to buy or sell.
• Define and input your risk management parameters, including Take Profit (Close at profit) or Stop Loss (Close at loss).
• Finally, to confirm your trade, click the "Place Order” button located at the bottom of the order window.

Alternatives to Trading NIO Shares

If you're looking for an alternative to gain exposure to NIO shares and potentially profit from the fluctuations in the shares price movement, there are several options available:

1. Exchange-Traded Funds (ETFs): This is a type of investment fund that tracks or seeks to outperform an asset or a specific market segment. Some exchange-traded funds (ETFs) related to NIO are classified as follows:
   • Broad Emerging Markets ETFs: These ETFs hold a small percentage of NIO shares alongside other emerging market companies. A common example is the iShares Core MSCI Emerging Markets ETF.
   • China Clean Technology ETFs: A major example of these ETFs is the Krane Shares MSCI China Clean Technology Index. These types of ETFs focus on Chinese clean technology companies and their holdings of NIO shares tend to weigh more.
   • Electric Vehicle or Lithium ETFs: These ETFs target the electric vehicle industry or companies involved in lithium production, often including NIO alongside other leaders in the EV industry.
   
   
2. Mutual Funds: Similar to ETFs, some actively managed mutual funds might include NIO in their investment portfolios. These funds are managed by professional fund managers who make investment decisions on behalf of the investors. By investing in these mutual funds, you gain exposure to NIO shares as part of a diversified portfolio without the need to select individual stocks yourself.

Why Trade the NIO Shares CFDs With Plus500

Accessibility: Plus500's intuitive platform empowers you to trade NIO shares CFDs seamlessly, whether on your desktop or with your mobile device (iOS/Android).

Robust Analytical Tools: You can gain valuable insights into NIO's share price movements and make informed trading decisions by utilising the technical tools and economic calendars on the trading platform.

Swift Order Execution: The Plus500 trading platform is designed to ensure that your trades are executed promptly at your specified entry and exit points.

Competitive Pricing: Take advantage of competitive spreads on NIO shares CFDs offered by Plus500, although it's essential to remain mindful of potential additional fees.

Trade on Margin: Plus500 makes provisions for amplified returns through leverage. However, it is important to keep in mind the associated risk of increased losses when using leverage.

Conclusion

In conclusion, NIO represents not just a company, but a vision for a sustainable future. This makes its shares an optional prospect for traders looking to gain exposure to the EV market trends. NIO's story, from its inception to its current position as a key player in China's EV market, provides valuable insights into the company’s vision and vision. With a grasp on the factors affecting NIO's market value like financial performance, industry trends, and regulatory policies, traders may navigate the price movement of NIO shares to seek opportunities from short-term fluctuations or long-term gains.