Nio becomes most popular stock among retail investors in October

Nio was only started in 2014, has nearly run out of cash and only just sold more than 10,000 cars in a quarter for the first time.

Yet the firm surpassed Amazon, Facebook, and even its more prestigious rival Tesla to become the most popular stock among retail investors in October, according to trading platform eToro.

The platform found that the Chinese electric vehicle maker leapfrogged Tesla and Apple to take the top spot after a 50 per cent rise in trades last month compared to September.

Less than half as many amateur traders invested in Tesla by contrast, which eToro puts down to failure by the US Congress to agree more economic stimulus measures even though it recently earned record sales and its fifth straight quarter of profits.

Shares in Elon Musk’s company have surged over the previous year, but Nio’s 13,000 per cent rise has far outpaced them.

The group delivered 3,553 vehicles in the second quarter of 2019, but that figure almost tripled to 10,331 last quarter. Total revenues meanwhile jumped 146.5 per cent to $526.4million.

Its losses are still quite large, but that has not stopped it benefiting from a lockdown boom in amateur investors trying their hand on the world’s stock markets.

They have particularly poured their cash into Silicon Valley tech firms like Zoom, Advanced Micro Devices, and cloud computing service Fastly Inc, which recorded a massive month-on-month October jump of eToro customers of 357 per cent.

Only two of the ten most in-demand stocks for such retail investors last month were non-American: the 116-year old aerospace engineer Rolls Royce Holdings and six-year-old Nio.

The Shanghai-based EV manufacturer has faced financial troubles but was boosted by a $1billion public funding injection in April. Sales are prospering thanks to the growing appetite in China for greener modes of transport.

A paper released just this week by the country’s State Council (Cabinet) predicts that sales of ‘new energy vehicles’ (NEVs) which includes plug-in hybrids and battery electric motors will constitute a fifth of all new car sales in 2025.

To help achieve this, the Chinese government will improve the green car quota system to guide automakers to make more eco-friendly vehicles after it ends NEV subsidies in two years and boost NEV sales for public uses such as bus and trucks. 

They have already announced an extra $1.4billion planned investment to build charging stations across the Middle Kingdom.

Adam Vettese, an eToro analyst, writes: ‘China has made no secret of its ambition to become a world-leading producer of electric vehicles and the fact it has backed Nio to the tune of more than $1billion to achieve that has probably got the Tesla boardroom collectively sweating.’ 

Europe and other Asian government have also been increasing their spending on EV infrastructure while providing numerous public incentives. For example, Norwegian all-electric vehicle drivers can drive in bus lanes and do not pay the annual road tax.

This has all driven demand up for e-vehicles and provided a fantastic opportunity for Nio and Tesla, as well as the established automotive companies to attract new customers and make the planet greener at the same time.

Electric vehicle sales are only expected to go up in the coming years even though a pandemic has dented sales in the automobile industry. 

Nio is planning to expand into the West next year, and judging by the recent actions of retail investors, its name could be heard a lot more commonly.