Should You Buy Nio Stock While It's Still Below Its IPO Price?
$NIO Inc (NIO.US)$ 's stock surged 14% on September 5, thanks to stronger-than-expected Q2 performance, though it missed revenue estimates by $40 million. Despite the miss, its delivery numbers and vehicle margins have improved, and the company gave positive guidance.
Why the Bears Are Backing Off
Nio’s unique battery-swapping stations and diverse EV lineup helped it stand out in the market. However, Nio’s growth slowed in 2022 and 2023 due to supply chain disruptions, price wars with Tesla, and weak consumer demand in China. The company saw margins drop to 9.5% in 2023, down from 20.2% in 2021, causing its stock to plummet from a high of $62.84 to under $4 earlier this year. But with deliveries improving, the bears are losing steam.
Nio is predicting 61,000-63,000 deliveries in Q3 and 10%-14% year-over-year growth, driven by new product launches like the **ET7 Executive Edition** and its expansion into Europe.
Challenges Nio Faces
1. Unprofitability: Nio’s battery-swapping network expansion remains costly, and stock dilution continues, affecting its valuations.
2. European Tariffs: New tariffs on Chinese EVs in the EU are a threat to Nio’s expansion plans outside China.
3. Geopolitical Risks: Tensions between the U.S. and China continue to put pressure on Nio’s stock.
1. Unprofitability: Nio’s battery-swapping network expansion remains costly, and stock dilution continues, affecting its valuations.
2. European Tariffs: New tariffs on Chinese EVs in the EU are a threat to Nio’s expansion plans outside China.
3. Geopolitical Risks: Tensions between the U.S. and China continue to put pressure on Nio’s stock.
Is It the Right Time to Buy?
Nio’s stock trades at a price-to-sales ratio of 1, significantly lower than $Tesla (TSLA.US)$ ’s 7, which may limit its downside. However, geopolitical risks, European challenges, and ongoing losses suggest it’s a risky bet in the short term. Long-term investors might find its current low valuation appealing, but it comes with uncertainties.
Nio’s stock trades at a price-to-sales ratio of 1, significantly lower than $Tesla (TSLA.US)$ ’s 7, which may limit its downside. However, geopolitical risks, European challenges, and ongoing losses suggest it’s a risky bet in the short term. Long-term investors might find its current low valuation appealing, but it comes with uncertainties.
If you're looking for growth and can handle the volatility, Nio might be worth considering while it’s below its IPO price. Otherwise, other EV stocks might offer better stability.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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CoolWaterCoolWater : No. Wait for it to pull back. PT to reload = < $4.50. IMHO only.