Key Insights
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NIO’s significant individual investors ownership suggests that the key decisions are influenced by shareholders from the larger public
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The top 6 shareholders own 53% of the company
A look at the shareholders of NIO Inc. (NYSE:NIO) can tell us which group is most powerful. The group holding the most number of shares in the company, around 32% to be precise, is individual investors. Put another way, the group faces the maximum upside potential (or downside risk).
Following a 15% decrease in the stock price last week, individual investors suffered the most losses, but institutions who own 29% stock also took a hit.
In the chart below, we zoom in on the different ownership groups of NIO.
View our latest analysis for NIO
What Does The Institutional Ownership Tell Us About NIO?
Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.
NIO already has institutions on the share registry. Indeed, they own a respectable stake in the company. This suggests some credibility amongst professional investors. But we can’t rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It’s therefore worth looking at NIO’s earnings history below. Of course, the future is what really matters.
Hedge funds don’t have many shares in NIO. Abu Dhabi (Emirate of) is currently the company’s largest shareholder with 23% of shares outstanding. William Li is the second largest shareholder owning 9.3% of common stock, and Tencent Holdings Limited holds about 6.8% of the company stock. William Li, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.
We did some more digging and found that 6 of the top shareholders account for roughly 53% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.
While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.
Insider Ownership Of NIO
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
We can report that insiders do own shares in NIO Inc.. Insiders own US$1.0b worth of shares (at current prices). Most would say this shows a good alignment of interests between shareholders and the board. Still, it might be worth checking if those insiders have been selling.
General Public Ownership
The general public– including retail investors — own 32% stake in the company, and hence can’t easily be ignored. While this group can’t necessarily call the shots, it can certainly have a real influence on how the company is run.
Public Company Ownership
We can see that public companies hold 6.8% of the NIO shares on issue. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.
Next Steps:
While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We’ve spotted 2 warning signs for NIO you should be aware of.
Ultimately the future is most important. You can access this free report on analyst forecasts for the company.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.