Nio (NIO) is an EV manufacturer based in China. I am bullish on the stock.
Sometimes, opportunities arise when a company in the EV sector is unloved.
This is precisely what happened with Nio in early 2020, and look at the progress the company has made since then.
In 2021, however, the NIO stock price has chopped around and made little to no progress.
As we’ll see, Nio’s financial and delivery data aren’t perfect, but they are positive overall and investors have a chance to own the stock at a favorable price. (See Analysts’ Top Stocks on TipRanks)
A Quick Look at NIO Stock
To be honest, NIO stock has been a trader’s paradise, but very frustrating for long-term investors lately.
The stock started off at $55 at the beginning of 2021, and quickly popped to $62.
This turned out to be a triple-top formation, however, as NIO stock hit that $62 level three times before declining quickly.
Therefore, if you choose to buy the stock, you might consider taking some or all profits at the $62 resistance level.
Currently, NIO stock is trading in the low $40s. There is no dividend, so hopefully the share price will return to the $60s.
Consistent Delivery Growth
With each new fiscal quarter, investors want to know whether Nio delivered, literally.
Vehicle deliveries could be considered the one of the most important metrics for a vehicle manufacturer.
What the stockholders want to see, without a doubt, is consistent growth in the company’s vehicle deliveries.
Fortunately, Nio has really proven itself in this regard. The company’s recently reported financial and delivery results prove this point.
Consider this: the company delivered 20,060 in Q1 of this year, then 21,896 in the second quarter, and then it jumped to 24,439 in the third quarter.
The company has really come a long way, after having only delivered 3,838 vehicles in Q1 2020.
Room for Improvement
This is not to suggest that NIO stock is a perfect investment, by any means.
There are always issues that companies can work to improve. For Nio, it’s about working towards profitability.
Granted, the company generated a whopping $1.52 billion in the third quarter of 2021.
That represents an increase of 116.6% year-over-year, as well an improvement of 16.1% over the second quarter of 2021.
However, Nio sustained a net loss of $129.6 million during Q3 of 2021.
That result is 42.3% worse than the previous quarter’s net earnings loss.
Going forward, it will be crucial for Nio to consider ways to turn the company’s impressive vehicle deliveries and revenues into bottom-line profits.
Wall Street’s Take
According to TipRanks’ analyst rating consensus, NIO is a Strong Buy, based on eight Buys and one Hold. The average analyst price target is $60.44, implying 46.3% upside potential.
The Takeaway
It’s entirely possible for NIO stock to stop drifting around and get back into the $60s.
The key will be for the company to continue on its growth trajectory in terms of vehicle deliveries and revenues.
Now, Nio just needs to work towards profitability, and that will be an essential step in the company’s overall growth story.
Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.
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