nio stock analysis

NIO Stock Analysis and Forecast

9 min read

NIO stock is a hot ticker in trading. It has become increasingly popular in the US. Our NIO stock analysis is here to help you know what to consider doing with it. Whether it’s day trading, seeing trading, or long-term investing, you want to get any stock at the best price. 

Chart by TradingView

Nio (NYSE: NIO) is a Shanghai-based electric vehicle maker founded in 2014. While it is not the largest EV maker in China, it is certainly one of the more popular among investors. Nio has been called everything from a meme stock to China’s version of Tesla (NASDAQ: TSLA). 

Nio is an ADR or American Depository Receipt stock. It trades on the New York Stock Exchange as a foreign company. This allows US investors to invest in companies based in other countries easily without having to pay foreign exchange fees. There are no trades on the Hong Kong Stock Exchange and the SGX Singapore Exchange. 

As a company, Nio is still in its hyper-growth mode. It is not yet profitable, although many analysts believe it will reach profitability in the next few quarters. Nio currently has six different models on the market and is about to release its ET5 sedan, which many believe will compete directly with Tesla’s Model 3. 

If you have followed the fascinating electric vehicle industry, you have undoubtedly heard of Nio. It is an interesting company with several features that set it apart from other EV makers. Let’s look at those competitive advantages and how an NIO stock analysis looks as an investment right now. 

Aside from NIO being a major player in the global secular trend of clean energies and EVQDs, NIO has some compelling advantages. Here is an NIO stock analysis some things you should know before investing in NIO’s stock.

NIO Stock Analysis Website

China Is the Global Leader

China receives a lot of flack from investors for many reasons. I get it; the accounting practices of Chinese companies in the past have not been ideal. The US and China are also undergoing another geopolitical feud among the world’s superpowers. But none of this should remove the fact that China is hands down the world’s largest EV market. 

In 2021, China sold more than 3 million electric vehicles. At the end of the year, it had an estimated 53% of the global EV market share. It sold more than all of Europe and the US combined. By 2030, China estimates that 60% of the vehicles on the road will be electric. NIO has the support of the Chinese government and major corporations like Tencent. That helps NIO stock analysis, though.

NIO Innovative Technology

In our NIO stock analysis, we found one of NIO’s largest competitive advantages. It’s battery swap technology. NIO is the only major EV maker to design their vehicles to be able to swap out low batteries for new ones.

This saves time when charging your EV at a charging station. It also takes the hassle of finding one, specifically in China, waiting for one to become available. 

NIO is already marketing itself as a high-end brand, so an added monthly or annual cost to have the service is of little impact to its customers. It takes just a few minutes at one of NIO’s more than 1,000 battery swap stations nationwide.

NIO plans to have more than 5,000 around the world by 2030. The company recently celebrated its ten millionth battery swap. The best part about battery swapping is that it creates a source of recurring revenues for the company. 

NIO Stock Analysis Expansion

Like other EV companies, NIO began its global expansion last year. The company has a goal of being in 25 new markets by 2025. It started with entering the EV hotbed of Norway and will continue with other markets like Germany and Denmark by the end of this year.

NIO has established its first battery swap station in Europe and several new research and development facilities in markets like Singapore and the US. 

NIO recently posted some positions in the US, which have been linked to a leased property in California. According to some within the company, NIO targets a 2025 entry date into the US market. Until then, according to our NIO stock analysis, NIO will continue to expand across Europe. 

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NIO Stock Analysis Competitors

Given that the Chinese EV market is so dominant, it makes sense that it is also highly competitive. While not all of them are of the same magnitude as NIO, China has more than 450 registered EV makers. Here are a few of the biggest names that battle NIO for China’s valuable market share. 

1. XPeng (NYSE:  XPEV)

XPeng is among the other Chinese EV makers often mentioned alongside Nio. This company was founded in 2014 and is headquartered in Guangzhou, China. It was founded by some former AliBaba (NYSE: BABA) executives and the former founder of Xiaomi. AliBaba remains a large investor in XPeng’s business

XPeng currently has four different models on the market and, like Nio, has recently expanded into Europe. So far, it has entered Norway, opening a retail store in Stockholm, Sweden, and selling in Germany. XPeng has also been linked to advanced technologies, including autonomous driving and flying cars

2. Li Auto (NASDAQ: LI)

Li Auto is the third Chinese EV maker often mentioned alongside Nio. This company is headquartered out of Beijing and was founded in 2015. Li only has one vehicle available, which is the Li Auto One, 

While it is still considered an EV, the Li Auto One is a plug-in vehicle with an internal combustion engine. Li has recently run into some issues with scaling the company larger. This Chinese EV maker has considered expanding into Europe as its next major market

3. BYD (OTC: BYDDY)

Regarding the Chinese EV industry, BYD Is the king right now. It is building up its capacity to deliver more than 300,000 EVs monthly. BYD has even cornered the commercial EV market with buses and trucks. BYD also rapidly expands into markets like Europe, Australia, and Japan. 

This company is often linked to Warren Buffett, who owns a stake from early in the company’s existence. It is the only EV maker that Buffett has invested in. BYD is going head-to-head with Tesla for domination in both the Chinese and global markets. At the same time, it is rumored to be a new battery supplier for Tesla and is working with NIO to create a mass-market line of EVs. 

Bearish Argument

There are some headwinds for NIO stock analysis right now. This includes bearishness for Chinese stocks that trade on the US markets. NIO has been mentioned in the delisting discussion more than once in 2022. Perhaps the most glaring mark against NIO is the short report that Grizzly Research released. The report claims NIO is inflating its battery-swapping figures to provide fake revenues and profits. It is not the first time a Chinese EV Maker has been accused of fudging its accounting numbers. 

NIO also faces supply chain issues in China and increasingly strict regulatory crackdowns out of Beijing. While the government wants the domestic EV industry to succeed, investors should still be cautious about its involvement in NIO’s business. There always seems to be a looming shadow hanging over Chinese companies. 

Popularity

Nio’s stock is popular, so it is always in high demand for an NIO stock analysis. What can we say about Nio’s stock? The stock soared higher in 2020 and hit an all-time high price above $62.00 in February 2021. It has been a steady drop since then, and the stock is currently trading around $10.00 per share. So far in 2023, shares of NIO have lost more than 43% and are down by more than 50% over the past year. 

It’s been one negative catalyst after another for NIO. The downward selling pressure of the bear market and the sell-off of Chinese-based companies have played a major role in the downturn for Nio. Regarding its business, the stock hasn’t quite reflected the company’s growth over that same time. 

It is difficult to project where Nio is going to go. The industry is competitive, but legacy automakers like Toyota will soon command a major part of the EV market share. Can NIO continue to grow? Or will it succumb to giants like Tesla and BYD? This is the true question when projecting NIO’s long-term growth as a company and investment

Final Thoughts: NIO Stock Analysis

Our NIO stock analysis grades out as a solid long-term investment. It has a strong global brand, novel technology, and a plan for expansion into new markets. Nio does need to separate itself from the likes of Tesla and BYD to cement itself as a global EV leader and not just a Chinese EV leader. 

Wall Street analysts feel strongly about NIO, with seven analysts giving the stock a Buy rating and five giving a Hold rating with a median target price of \$12.95. The stock trades at a price-to-sales ratio and price-to-earnings ratio lower than Tesla. As long as NIO continues to execute its expansion in both China and abroad, the stock should reward investors from its current price levels. 

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