Wall Street has started to trim price targets for Chinese EV manufacturer NIO (NYSE:NIO), just as the company initiates price cuts for its vehicles. This double whammy could spell trouble for investors, but the stock kicked off the week on a high note, rising over 7% at the time of writing. This comes after a rollercoaster Friday session sparked by the release of Q1 earnings. While sales and earnings were largely on par with Wall Street expectations, the company’s promise to deliver over 10,000 vehicles in June, a jump from April and May’s figures, left investors uncertain.
Citi analyst Jeff Chung, unfazed by the promise of higher deliveries, slashed his NIO stock price target from $13.40 to $11.50, citing “enormous pricing/margin pressure” in the sector. This comes as NIO decreased prices for all entry-level trims over the weekend, effectively slicing about $4,500 or nearly 10% off some vehicle’s initial prices. While this might temporarily bump sales, Chung believes it could be unsustainable due to the fierce price competition in the Chinese EV market.
Overall, Wall Street analysts have a consensus price target of $12.52 on NIO stock, implying 50.66% upside potential, as indicated by the graphic above.