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It hasn’t been an easy week for Nio (NYSE:NIO) so far. The Chinese electric vehicle (EV) producer has some important catalysts coming up, namely its second-quarter earnings report, scheduled for Aug. 29. But even as this date draws closer, NIO stock continues to trek downward on the price chart amid strong volatility that it can’t seem to overcome.
Wall Street isn’t too pessimistic about the company’s growth prospects. Seven out of 12 analysts on TipRanks rate it as a “buy,” and Deutsche Bank recently upgraded its NIO stock price target. It’s true that the company is recovering from a difficult year that brought plenty of macroeconomic headwinds. However, InvestorPlace contributor Vandita Jadeja sees it as one of the market’s most undervalued EV stocks that investors shouldn’t ignore. In her words:
“While Nio is still reporting losses, the company has the potential to report profits in the coming years. It also has a presence across Europe, and if not for the supply chain issues in 2022, Nio would have already expanded to other countries. The production has started to grow in the past few months, but there is a long road ahead. Its second-quarter results will be interesting and will pave the path ahead. Holding NIO stock at the current level could give a strong chance to make the most of the upside in the coming months.”
If Nio reports positive earnings on Aug. 29, it could start September on an excellent note as investors look toward the future. However, until it does, sentiment toward NIO stock among institutional investors remains mostly negative. Wall Street analysts may be regarding it with some optimism, but hedge funds don’t seem so convinced of its potential.
Top Investors Still Betting on NIO Stock
Data from Whale Wisdom makes clear that, much like share prices, institutional investor sentiment toward Nio is trending downward. The number of funds holding NIO has decreased, as have both new and increased positions. That said, closed positions are down 27% for the quarter, and reduced positions have fallen by more than 4%. The number of 13F shares has increased slightly, rising roughly 1%. And while the put/call ratio for NIO stock is down 27%, it is still fairly high at 0.91, indicating that bearish sentiment is still strong.
Let’s take a closer look at the top institutional investors who are maintaining their bets on NIO stock as it prepares to report Q2 earnings.
- Cyvn Investments: 124,833,157 shares. This fund, majority-owned by the government of Abu Dhabi, added its entire stake in Nio in July 2023.
- Tencent Holdings (OTCMKTS:TCEHY): 124,112,015 shares. This Chinese tech conglomerate recently decreased its NIO stock position by 40,137,614 shares.
- Baillie Gifford & Co: 119,456,115 shares. This investment management firm sold off 676,501 shares of NIO stock during the previous quarter.
- BlackRock (NYSE:BLK): 66,794,714 shares. This Wall Street leader recently added 4,835,232 shares to its Nio position.
- Vanguard Group: 48,009,571 shares. This mutual fund giant increased its Nio holdings by 388,793 shares during Q2.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.