‘Time to Get Out,’ Says Goldman Sachs About Nio Stock

Nio (NYSE:NIO) stock continued its slide during Monday’s session, pushing its year-to-date losses to 48%. The end of the year can’t come soon enough for investors, who will be hoping 2025 will bring a turnaround in fortunes for the struggling Chinese EV maker.

However, it would be better to keep a lid on expectations, appears to be the advice of Goldman Sachs analyst Tina Hou.

Actually, that’s too positive an interpretation of Hou’s stance, as the analyst has just downgraded her Nio rating from Neutral to Sell. Hou has also lowered her price target from $4.8 to $3.9, suggesting the stock is still overvalued by 16%. (To watch Hou’s track record, click here)

“We expect limited new model pipeline for the Nio brand and slow production ramp-up for Onvo to position the company unfavorably into 2025E, with potentially intensified competition starting in the first quarter of next year,” Hou opined.

Moreover, as the company expands the sales network for the Onvo brand, Hou anticipates that rising S&M (sales and marketing) expenses, combined with higher R&D costs, will exacerbate operating losses, delaying the company’s path to profitability over the next three years.

At the same time, Hou thinks the Street is underestimating the operational expense increase required to launch 300–500 Onvo stores by 2024 or the first half of 2025, each employing around 10 employees. Additionally, the analyst questions whether this store expansion will effectively drive sales volume, especially given the sustained cost base in the following years.

Near-term challenges also loom. Hou flagged “downside risk” to Nio’s Q4 volume and revenue guidance, pointing out that November’s weekly delivery rate of 4,800 units falls well short of the 5,900-unit weekly pace needed to meet its targets for the remainder of the year.

With only one new model launch (the ET9, priced at Rmb800k), Hou anticipates volume growth of 5%, increasing from 201,000 units in 2024E to 210,000 units in 2025E. The analyst thinks Nio is likely to find itself in a “relatively passive position,” as it attempts to counter new product launches from competitors in the Rmb300k+ NEV segment, which feature advanced urban autopilot capabilities, such as Li Auto’s BEV models, the AITO M8, and Zeekr’s super hybrid SUV.

Adding to the pressure, Nio’s L60 model has experienced a “slower production ramp-up progress” compared to rivals, which has negatively affected the model’s order momentum.

Turning now to the rest of the Street, one other analyst joins Hou in the bear camp. However, with 8 Buys and 5 Holds, the stock still claims a Moderate Buy consensus rating. The average price target of $6.05 suggests a ~30% upside over the next 12 months. (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.