Nio (NYSE:NIO) stock endured a rough ride last year, tumbling 48% as disappointing earnings weighed heavily. Analysts slashed their 2024 forecasts along the way, cutting revenue estimates by 19% and earnings projections by 63%, adding to the pressure on the stock.
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Looking ahead, J.P. Morgan analyst Nick Lai emphasizes that Nio’s ability to deliver on earnings will once again be a critical factor shaping its performance in 2025.
On that front, the omens don’t bode well as Lai has made some downward revisions to prior forecasts. The analyst has lowered FY25-26 revenue and earnings estimates by 7-10% and 13%, respectively, bringing them in line with Street expectations. Lai’s full-year volume estimate for 2025 stands at 334,000 units, reflecting a 50% increase from 2024. However, this falls short of the company’s target to double sales to approximately 440,000 units. “We will monitor closely Nio’s monthly sales run rate as well as order flow,” he said on the matter.
This year, Nio will introduce the ET9, a high-end premium sedan priced above RMB 800k. While Lai thinks this model could help support margins, its volume impact may be limited due to a smaller addressable market. On the other hand, a significant portion of this year’s volume growth is expected to come from its mass-market brand, ONVO, with the L60 SUV – launched in 4Q24 – contributing throughout the year. The ONVO lineup will expand in the second half of the year with two new SUVs similar in size to Li Auto’s L7 and L8. Additionally, Nio’s budget-friendly brand, Firefly, made its official debut at Nio Day in December 2024. The initial model, a compact sedan comparable to BMW’s Mini-series and priced around RMB 150k, was launched and is set to start contributing to sales from 2Q25.
Despite these developments, Lai sees other Chinese OEMS as better positioned, preferring BYD, Xiaomi, and then Geely and Xpeng. As such, on account of a “more conservative view” regarding Nio’s prospects, Lai has now downgraded his NIO rating from Overweight (i.e., Buy) to Neutral, while his price target is also reduced from $7 to $4.7. (To watch Lai’s track record, click here)
Overall, while Wall Street’s average price target of $5.31 suggests a potential 25% gain, analysts remain cautious, as evidenced by the consensus Hold (i.e. Neutral) rating. (See Nio stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
