Shares of Chinese EV maker NIO (NYSE:NIO) soared 13.5% yesterday and are outperforming the market again today, with the rally starting after the company reported earnings last week. Despite the company reporting huge losses, the stock continues to ride high on the overall bullish sentiment from Wall Street analysts based on strong demand momentum for its new and existing offerings as well as increased production due to its expansion efforts.
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Headquartered in Shanghai, China, Nio designs, manufactures, and sells smart and connected premium electric vehicles in China, Hong Kong, the U.S., the U.K., and Germany.
The New ET5 Sedan Receives 200,000 Pre-Orders
NIO’s newest mid-size sedan, the ET5, has already received approximately 200,000 pre-orders based on projections from sales outlets in China, as reported by the local media in China.
Nio started accepting orders for its ET5 on September 9, and the first round of deliveries is expected by the end of September.
Compared to Nio’s earlier sedan, the ET7, the ET5 has a lower price range and is expected to compete with similar mid-size electric vehicles made by Tesla (NASDAQ:TSLA), Mercedes (OTC:MBGAF), and BMW (OTC:BAMXF).
What’s more comforting is that Nio’s existing lineup of EV vehicles continues to generate stable sales based on Nio’s latest delivery numbers.
A Snapshot of NIO’s Q2 Results and Q3 Guidance
On September 7, Nio reported widening Q2 losses that came in at RMB 2,745.0 million ($409.8 million), 316.4% higher on a year-over-year basis. Cost pressures that were triggered due to COVID-related shutdowns led to the huge losses.
Despite the losses, investors cheered the impressive delivery numbers and have been buyers of the stock since the earnings announcement. Overall, deliveries grew by 14.4% year-over-year to 25,059 vehicles.
More positively, for Q3, NIO predicts its revenues to achieve year-over-year growth of 31% – 38.7%, being in the range of $1,918 – $2,030 million.
Is NIO Stock a Buy, Sell, or Hold?
Demand for EV sales in China remains robust, boding well for EV makers like Nio. As per TipRanks, the Street is very optimistic about Nio stock, giving it a Strong Buy consensus rating, which is based on nine unanimous Buys. Nio’s average price forecast of $31.84 implies 47% upside potential from current levels.
Two days ago, Deutsche Bank (NYSE: DB) analyst Edison Yu chose Nio as his top EV pick and reiterated a Buy rating with a price target of $39 (79.31% upside potential).
Impressed by the preliminary customer feedback on the ET5 mid-size sedan, Yu believes that the new vehicle could take the spot of the top-selling premium EV model.
Further, the analysts stated that despite having higher prices, Nio’s older products continue to gain traction and report good sales numbers, which implies strength in Nio’s brand.
On top of this, the blogger community is bullish on Nio stock. Based on 68 blogger opinions, the Blogger sentiment is 82% positive on Nio compared to the sector average of 64%.
Concluding Thoughts
Like most top Chinese stocks, Nio stock has lost over 40% of its market capitalization over the past year due to the looming delisting concerns from U.S. stock exchanges and the overall bear market.
The audit review between the U.S. and China is in process, and if a positive outcome is reached, Nio stock could rally faster on the news as well as from the catalysts mentioned above.
