Shares of Chinese EV maker NIO (NYSE:NIO) have plunged by over 21% this month, despite the company delivering nearly 14% more vehicles last month and exceeding its delivery guidance for the fourth quarter.
Even with a $2.2 billion liquidity injection from Abu Dhabi-based CYVN Investments last month, investor confidence in the stock remains subdued. For context, NIO’s share price has tanked from over $60 in February 2021 to its present level near $7 per share.
Despite this fall, short interest in the stock remains elevated, and the share price languishes at a pitiful price-to-sales multiple of 0.31. Apart from NIO’s history of consistent losses, investors are wary of the rising scrutiny of Chinese EV makers by European regulators.
Multiple Chinese EV producers are increasingly looking at the European market to drive sales amid tough market conditions in China. Further, the lack of new model introductions is expected to impact NIO’s performance in the first half of this year. The company may have to spend more advertising dollars and lower prices to sustain its growth.
What is the Target Price for NIO?
Bank of America Securities’ Ming-Hsun Lee has lowered the rating on NIO to a Hold from a Buy, and Goldman Sachs’ Tina Hou recently initiated coverage on the stock with Hold. Overall, the Street has a Moderate Buy consensus rating on NIO, and the average NIO price target of $10.86 points to a massive 51.5% potential upside in the stock.
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