Nio stock price, today on 07 October 2022 has seen a sharp decline of almost 7%. There seems two main reason behind this-
- Release of the latest U.S. jobs data that is indicating a strong labor market and a sign of good U.S. economy. And consequently this could encourage further Fed rate hike.
- Considering challenging supply chain issues, some analysts have recently lowered price targets of other EV makers, including Neo.
Surprisingly, the NIO share price has steadily declined since making an all-time high of $66.99 on January 11, 2021. In the year 2022, the stock has registered a decline of up to 60 percent.
Undoubted! NIO stock is not doing well these days. Investors are a bit disappointed by the volatility in share prices. But what is the reason? And what next?
The reasons can be many. The three things that happened in 2021 are-
- An escalation of geopolitical risk, as is being seen in the context of Afghanistan and the Taliban.
- Figures of slowdown in China’s retail sales and industrial production in July, which may deepen in the coming times due to increasing cases of Coronavirus.
- Risks related to NIO’s autonomous driving technology as seen in the news of a fatal accident involving NIO’s es8 model car.
But in 2022 the situation has worsened a bit. The main reasons for this are supply chain disruptions, record high inflation, Fed rate hikes and fear of recession.
However such factors only trigger short-term to medium-term corrections. But if you look at it from a long-term perspective, it is the quality and growth of a company that decides the fate of a stock.
So let us make an in-depth analysis to know the future prospects of NIO Stock Price.
What is NIO Inc. Stock?
NIO stock is the stock of NIO Inc. Company which is a leading smart electric vehicle manufacturing company in China. It is headquartered in Shanghai and was incorporated in 2014.
Formerly it was named NextEV Inc. NIO stock is listed on the New York Stock Exchange (NYSE). It is also known as China’s Tesla.
The company designs, develops, manufactures (jointly) and sells 5,6 and 7-seater electric SUVs and smart electric sedans.
Connectivity, autonomous driving and artificial intelligence are the core of this premium company. Which shows the quality of business of NIO.
In addition, the company’s other business verticals are –
- energy and service packages to its user,
- manufacture of e-powertrains and battery packs,
- power solutions, power swap and power map,
- repair and maintenance services,
- statutory and third-party liability insurance.
But due to their low contribution to revenue, NIO shows its business in only two categories in the financial results. These are-
Vehicle Sales – It is the largest source of revenue for the company (about nine-tenths). EP9, EC6, ES6, ES8 are popular models of electric vehicles from NIO.
The latest model ET7 is to be launched in the first quarter of 2022. The ET7 is an enhanced combination of NIO’s NAD (NIO Autonomous Driving) technology, NIO Adam, a super computing platform, and NIO Aquila, a super sensing system.
Other Sales – However, from other sales, the company gets only about a tenth of the total revenue (Q4 2020). But the company wants to convert the segment electric vehicle charging services under it into a bigger market.
The company, NIO, currently sells vehicles in China and plans to expand its business to international markets in the near future. This effort of the company is to meet the rapidly growing EV demand, which the company has started from Norway.
Quality of Management of NIO Stock
NIO Inc. is a young company. This company belongs to Consumer Cyclical Sector of Auto Manufacturers Industry. Mr William Li is the founder, chairman & CEO of the company. Around 7,763 full time employees are working here.
The company’s existing charging infrastructure consists of 382 destination charging stations, 301 NIO power swap stations and 204 power chargers. The company is to deploy 4,000 active battery swap stations by 2025.
Nio Inc, the fast growing EV manufacturer, is to expand its business into Electric Vehicle Charging Station (EVCS). EVCS market itself is going to reach $93 billion by 2027 with a CAGR of 20% ( a report by Astute Analytica).
This company with all its unique capabilities and technologies is being able to create an online and offline presence in the EV industry. This reflects the high degree of quality of management.
And we can say that Mr. Lee with his management team has been able to generate interest from investors across the globe.
NIO Stock Price Analysis
The stock analysis is based on data described on the company’s website as well as in its annual report on the US Securities and Exchange Commission (SEC).
The idea that electric vehicles are our future has opened the door to success for EV stocks like NIO Inc.
Must Read: Electric Vehicles and 10+ EV Stocks from India & Abroad
The concept of Battery as a Service (BaaS) model makes NIO more than just a car maker, a unique company among its peers.
However, for this reason, NIO’s competition with domestic EV manufacturers and well-established automakers has not diminished. The company is facing tough competition.
XPeng, Li Auto, Volkswagen, BMW and Tesla are some of its major competitors.
Risks Associated with NIO Stock
Despite the many merits, some of the risks and concerns associated with the stock are as follows-
- intensely competitive market,
- still developing extensively,
- still has not been a profitable company, and has only begun to generate positive cash flow from operations,
- manufacturing in collaboration with partners which can be risky,
- Green hydrogen could replace lithium-ion-based battery electric vehicles (BEVs) in the future.
Financial Performance of NIO Stock Price
Year-on-Year
If you look at the data for the last four years, you get –
- The total revenue of the company has increased 4 times.
- Operating margin has improved but is still negative.
- RoE in 2020 was -53.77%.
Q2 2021 Earnings Report
The company’s Q2 2021 earnings report was commendable on several fronts. The company has shown radical improvements in deliveries, revenues and gross margin.
- Vehicle deliveries grew by 111.9% year-on-year but only 9.2% in Q-o-Q.
- Vehicle sales increased by 127% (Y-o-Y) and in Q-o-Q, it increased by 6.8%.
- Total revenue grew by 127.2% (Y-o-Y) and 5.8% (Q-O-Q).
- Gross margin was up approximately 19% year-on-year as well as on a quarterly basis.
Q2 2022 Earnings Report
- The company has done well in terms of revenue.
- The net loss has also come down.
- Basic and diluted losses per share have been reduced from CNY 3.55 to CNY 2.80.
Financial Elements of NIO Stock Price
| Financial Element | Value & Remarks |
| 52-WEEK Range | 11.67-44.27 |
| Market Cap | $24.454B |
| EPS – (TTM) | -0.70 |
| P/E Ratio | Not Available; Because the company has not become profitable yet. |
| P/B Ratio (mrq) | 5.46 |
| EV/EBITDA | -3.28 |
| EV | 23.51B |
NIO Stock Price Chart
Image source: Yahoo Finance
Technical analysis of this stock on September 1, 2021 at CMP 39.31 indicates the following important points-
- On the weekly chart of NIO stock, a negative head and shoulders pattern is forming which could take the stock price higher again towards 60.
- For this to happen, the stock price must close above the 50-day EMA and 200-day EMA at 41.62 and 41.71, respectively.
- Stochastic is currently showing an upward trend in the share price.
- Technical indicators are showing that there is a buy opportunity in the stock with a stoploss of 36.
But the chart of Nio Stock as on October 7, 2022 CMP 13.73 gives a different view.
- The stock may get support near 10 on the monthly chart.
- Only after closing above 24.75 can the stock return to a permanent rally.
NIO Stock Price Target and Forecast 2021
There are many ways to make stock market predictions. Among them, following the stock calculator, the target of this stock for the year 2021 (by December 31, 2021) could be as follows –
(These targets are just for guidelines. Learn stock market calculator properly for best investment returns)
| Target1 | Target2 | Target3 | Target4 | |
| above 50 UPTREND Targets | 58 | 73 | 106 | – |
| below 39.50 DOWNTREND Targets | 34 | 27 | 19 | – |
NIO Stock Price Target and Forecast 2022
| Target1 | Target2 | Target3 | Target4 | |
| above 34 UPTREND Targets | 37 | 44 | 50 | – |
| below 25 DOWNTREND Targets | 20 | 15 | 9 | – |
CONCLUSION
What we have discussed about NIO will enable you to make an informed decision. Certainly NIO could prove to be a long haul horse for investors.
It will be important that you keep an eye on the quarterly results of the company so that the current performance as well as the future targets can be gauged in time.
Loved the post and if you have some more time, do share and comment.
FAQs about NIO Stock Price
Let me answer some of your questions which will be useful for you.
Will NIO sell cars in the U.S.?
Nio is a premium electric vehicle company from China. It mainly sells electric vehicles and services in China. But selling electric cars and services in other countries is one of the company’s future plans. Nio has already started its business expansion from Norway.
In the future it is possible that Nio will start selling cars in the US market. But it should be clear that it has no manufacturing plant or factory of its own, not even in China.
Is NIO the Tesla of China?
Not sure! But it is said so. In fact NIO is a technology rich and exclusive company of EVs. Its futuristic growth outlook may be the reason for being called the Tesla of China.
Will NIO stock survive?
Of course it must survive. The Chinese government is supporting EVs all the way from what we have seen in 2019. The company has the potential to grow or change its business over time.
Is NIO undervalued?
No, in my opinion the company has been corrected according to its valuation. It is neither undervalued nor overvalued. Surprisingly the company is still making losses and hence there is no P/E.
It is quite difficult to calculate its fair price. Nevertheless, the valuation of the company is determined not only by the present, but also by the future.
Where will NIO be in 5 years?
EVs certainly have a bright future. The market for electric vehicles is expected to grow 15 times by 2030. But that doesn’t mean every EV stock will grow at the same pace.
Green hydrogen is going to be the most accepted fuel in the future. In such a situation, the BaaS model of NIO may fail or it may have to change its business model. However, under normal circumstances, the share price of NIO may go up.
That too 15×(15 or 40, which you understand as intrinsic value).
Can NIO stock reach $100?
Absolutely yes! But it is not a matter of prophecy. It depends on the demand for the shares if it arises due to improvement in the company’s next quarter results. This is possible for the current financial year also.
Is NIO stock a good choice?
Basically it may be a good option later but for now technically, it is a good option to buy NIO stock with stop-loss of 36 for short term and stop loss of 30 for long term.
Is NIO the next Tesla?
Absolutely not, but investors will have a few more options than Tesla in the coming days.
Does NIO have its own factory?
No, NIO does not have its own factory. The company has clearly mentioned that it jointly manufactures EVs.
What does NIO mean in Chinese?
NIO means Blue Sky is coming. It gives a feeling of assurance that the company’s products will always be environmentally friendly.
What will be share price of NIO Stock in one year?
In my view, it should follow the following price trends-
Above 50 it could be as per the level of 58 then 73 and then 106.
Below 39, it can touch 34, 27 and then 19.
Is it worth buying NIO Stock at current market rate?
Yes, this is the stock to buy close to 39 with stoploss 36.
