Key Insights
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Significant control over NIO by retail investors implies that the general public has more power to influence management and governance-related decisions
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A total of 19 investors have a majority stake in the company with 50% ownership
Every investor in NIO Inc. (NYSE:NIO) should be aware of the most powerful shareholder groups. We can see that retail investors own the lion’s share in the company with 43% ownership. In other words, the group stands to gain the most (or lose the most) from their investment into the company.
Following a 8.4% decrease in the stock price last week, retail investors suffered the most losses, but institutions who own 21% stock also took a hit.
In the chart below, we zoom in on the different ownership groups of NIO.
Check out 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 implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. It is not uncommon to see a big share price drop if two large institutional investors try to sell out of a stock at the same time. So it is worth checking the past earnings trajectory of NIO, (below). Of course, keep in mind that there are other factors to consider, too.
Hedge funds don’t have many shares in NIO. Looking at our data, we can see that the largest shareholder is Abu Dhabi (Emirate of) with 20% of shares outstanding. For context, the second largest shareholder holds about 8.0% of the shares outstanding, followed by an ownership of 7.8% by the third-largest shareholder. William Li, who is the second-largest shareholder, also happens to hold the title of Chief Executive Officer.
Looking at the shareholder registry, we can see that 50% of the ownership is controlled by the top 19 shareholders, meaning that no single shareholder has a majority interest in the ownership.
Researching institutional ownership is a good way to gauge and filter a stock’s expected performance. The same can be achieved by studying analyst sentiments. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too.
Insider Ownership Of NIO
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.
We can report that insiders do own shares in NIO Inc.. The insiders have a meaningful stake worth US$751m. 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, who are usually individual investors, hold a 43% stake in NIO. 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
It appears to us that public companies own 7.8% of NIO. It’s hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it’s worth watching this space for changes in ownership.
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.
If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com