Nio Inc (NIO)

[DiscoverGold]

Is Nio Stock A Buy As A Catalyst Looms For The Tesla Of China?
By: Investor's Business Daily | December 11, 2021

China's Nio (NIO) continues to see robust demand for its luxury electric SUVs, while growing its lineup of electric cars and innovating EV batteries. But chip woes linger. Is Nio stock a buy right now?

At the Nio Day on Dec. 18, the EV startup could show off a cheaper, entry-level ET5 electric sedan. It could also reveal a new, mass-market brand. Deutsche Bank analyst Edison Yu considers the upcoming event a catalyst for NIO stock.

Founded in 2014, Nio had little experience in vehicle manufacturing when it came on the scene. But the EV startup, sometimes called the Tesla of China, went on to deliver booming sales. Unlike Tesla (TSLA), Nio does not make its own electric cars, instead partnering with a state-owned auto manufacturer.

Nio Earnings And Fundamental Analysis

On key earnings and other fundamental metrics, Nio lags. It's a young and fast-growing company, still looking to turn a profit.

Nio stock earns an EPS Rating of 45 out of 99, and an SMR Rating of D, on a scale of A to a worst E. The EPS rating compares a company's earnings growth vs. other companies. The SMR Rating measures sales growth, profit margins and return on equity.

On Nov. 10, Nio delivered a less-than-feared loss for the third quarter. Nio lost 6 cents a share while revenue soared 117%. But the startup gave weaker-than-expected Q4 revenue outlook, as chip shortages and production challenges continue.

Analysts expect Nio to pare losses to 66 cents per share for all of 2021 from 73 cents in 2020, according to FactSet. Revenue is seen surging 123% this year.

In Q3, Nio doubled EV sales, but Chinese startup rivals Li Auto (LI) and Xpeng (XPEV) nearly tripled sales. In October, Nio's EV sales plunged 27.5% while Li Auto and Xpeng continued to see triple-digit, year-over-year growth. Chip-supply issues and manufacturing upgrades ahead of new EVs in 2022 weighed on sales, Nio said.

Amid stiff competition, Nio is speeding up new EV launches. It aims to deliver three new products in 2022. Those include the ET7, its first electric sedan and most high-tech vehicle yet. The ET7, unveiled at the 2020 Nio Day, is set to offer more than 600 miles of battery range, as well as highly autonomous driving.

Its launch is set for Q1 2022 in China and by end of 2022 in Europe...

Is Nio Stock A Buy Now?

From a fundamental perspective, Nio's financial condition is improving after debt and liquidity fears slammed shares. It has significantly pared losses while delivering huge top-line gains.

An expanding vehicle lineup, entry into Europe and battery innovations mean more runway for growth. But the EV wars are heating up. In the near term, the chip supply crunch poses a headwind to Nio. Longer term, battery supplies could be an even bigger headache for EV stocks at large.

Nio stock is near a 52-week low and does not have a current buy point. But it's a promising and high-growth EV stock, so check back for updates.

Bottom line: Nio stock is not a buy right now.

Read Full Story »»»

DiscoverGold