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To be sure, there is no way to know for sure what is going to happen. However, the smart money should always be looking to take advantage of a dip. And there is no doubt that the cost of Nio stock declined in recent days.
Nio Stock at a Glance
Compare that number to Dec. 23, 2020, when the midday price was around $46. This sort of advance brings cheer to investors able to buy shares earlier in 2020. During the summer, Nio was trading around $14, which was a healthy gain in just a few months.
All in all, that’s not bad for a company that nearly went broke.
Nio’s brush with collapse came when the novel coronavirus pandemic was beginning to rage. The company faced faltering demand and cash-flow problems. Agencies of the Chinese government stepped in to keep the Shanghai-based company afloat. Once Nio stabilized, it was off to the races.
Hedge Funds Paying Attention
Nio is getting more attention from hedge fund managers, according to an Insider Monkey report carried recently by Yahoo.
At the end of the third quarter, 35 hedge funds reported holding shares of Nio. This marked an increase of five funds from the second quarter. But the 30 holding Nio at that time was an all-time high, the report says.
What does this mean to regular investors?
The behavior of hedge fund managers is only an indication of how they view a stock’s long-term prospects. Their preferences are just another factor to fold into the mix when doing your due diligence. It doesn’t mean retail investors should blindly follow suit.
Is Nio Another Tesla?
In fact, Nio is commonly described as the “Tesla of China.” It’s easy to see why. Both companies make attractive vehicles priced for China’s growing premium market. And both were embraced by Chinese consumers, whose appetite for electric vehicles appears strong.
But the companies are really taking different paths.
For example, Tesla also is a major player in the development of solar energy systems for homes and businesses. Tesla is pushing the envelope on designing the batteries needed to store and deliver power snagged from the sun. By making solar power more accessible, Tesla’s initiatives have the potential to achieve far-reaching impacts on how consumers obtain electricity. This diversity gives TSLA more depth.
Nio, meanwhile, seems focused on its vehicles and building closer ties to its customers. One way it is doing this is through its facilities, which go beyond showrooms and waiting rooms to serve as social destinations.
The Bottom Line
I agree with my InvestorPlace colleague Lou Carlozo, whose recent article about Nio said that “smart investors learn to see the long-term potential.” Nio certainly seems to be poised for the long haul as it grows despite several competitors in China, including Tesla.