We recently published a list of 12 Best Robinhood Stocks to Buy Under $20. In this article, we are going to take a look at where NIO Inc. (NYSE:NIO) stands against other best Robinhood stocks to buy under $20.

Stocks priced under $20 have become an attractive option for investors looking to tap into growth without paying the high premiums of blue-chip stocks. These companies often operate in innovative sectors—like quantum computing, autonomous delivery, and clean energy—where technological advancements could lead to significant returns. However, these stocks also come with risks, such as volatility and speculative trading, making it important to separate hype from long-term potential.

Retail trading platforms like Robinhood have made these stocks more accessible, allowing retail investors to drive market movements. In 2023, retail trading accounted for 23% of U.S. equity volumes, according to JPMorgan. This shift has altered the landscape of stock investing, with retail investors now playing a significant role in driving the prices of low-priced stocks. Robinhood, with its commission-free structure and easy-to-use app, has attracted millions of new investors eager to participate in the stock market, often gravitating toward the affordability of stocks under $20.

Low-priced stocks are appealing for a few key reasons. The affordability of these stocks means that investors can diversify their portfolios more easily, mitigating risk by spreading investments across various companies or sectors. For new or retail investors, low-priced stocks can provide an accessible entry point into the market. With a smaller initial investment, it’s easier to dip your toes into stock investing without committing large amounts of capital.

Low-priced stocks often represent companies in the early stages of growth or in industries that are still developing. These stocks may have greater potential for significant price appreciation, particularly if the company experiences a breakthrough. Investors who get in early can sometimes ride the wave of exponential growth. For example, in 2010, Tesla’s IPO price was $17 per share, and for several years, it traded below $20. By 2021, however, the company’s stock price surged to over $1,000 per share, reflecting the company’s transition from an early-stage electric vehicle startup to a global leader in the industry.

However, these stocks also come with risks, such as volatility and speculative trading, making it important to separate hype from long-term potential. According to Saxo Bank, small-cap stocks—often found in the under-$20 price range—tend to be more sensitive to market fluctuations and economic shifts, which can lead to higher volatility and greater price swings.

Our Methodology

For this list, we analyzed stocks that are frequently traded and popular among Robinhood users, focusing on those that are trading under $20. We started by gathering data from multiple trusted financial sources, including popular stock websites and financial news platforms, to identify Robinhood stocks under $20 that are consistently favored by retail investors. Next, we cross-referenced these stocks with Insider Monkey’s Q3 2024 hedge fund database to identify which companies had significant institutional backing. The stocks were then ranked according to the number of hedge fund investors holding positions in them.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here).

A fleet of eco-friendly electric cars, a symbol of the company's commitment to sustainability.

NIO Inc. (NYSE:NIO)

Number of Hedge Fund Holders: 20

NIO Inc. (NYSE:NIO) is a holding company specializing in the research, development, and manufacturing of premium smart electric vehicles. The company designs, develops, and sells high-end electric vehicles. It is also at the forefront of developing cutting-edge technologies like battery swapping, autonomous driving, and its NAD (NIO Autonomous Driving) system.

NIO Inc. (NYSE:NIO) has been making significant strides in its product and market expansion during late 2024 and early 2025. In December 2024, the company set a new monthly record by delivering 31,138 vehicles, representing a 72.9% increase year-over-year, while January 2025 saw 13,863 deliveries, up 37.9% from the previous year.

For Q3 2024, NIO Inc. (NYSE:NIO) had a mixed financial performance. Vehicle sales totaled $2.38 billion, a 4.1% decline from Q3 2023, while gross profit rose 31.8% to $286 million. The company incurred a net loss of $721 million, an 11.0% increase compared to last year. Operating expenses also rose, with R&D costs up 9.2% to $473 million. However, the company remains in a strong liquidity position, with cash and equivalents totaling $6 billion, providing a solid buffer for ongoing investment and future expansion despite the profitability challenges.

A major highlight in the company’s product strategy was the introduction of the NIO ET9, a smart electric executive sedan, which is expected to start deliveries in March 2025. Additionally, NIO Inc. (NYSE:NIO) expanded its global footprint by unveiling its Firefly brand, aiming to capture the European market with small, premium electric vehicles, with the first model expected to launch in mid-2025.

Overall, NIO ranks 5th on our list of best Robinhood stocks to buy under $20. While we acknowledge the potential for NIO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NIO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

Disclosure: None. This article is originally published at Insider Monkey.