Nio Inc. (NYSE:NIO) investors have had quite the rollercoaster ride in 2024. The year kicked off with a sharp decline, as the stock plunged over 60% between early January and mid-April. However, since then, the Chinese EV maker has staged a stunning recovery, with shares skyrocketing by nearly 80%.
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Recent developments have been encouraging. In Q3, Nio set a new quarterly record with 61,855 vehicle deliveries, reflecting an 11.6% year-over-year growth. Moreover, the company is expanding its market presence with the launch of the ONVO L60, an affordable model that recently rolled off the production line. Chinese government subsidies and tax incentives for EV purchases and trade-ins have further bolstered investor confidence.
While supporting a bullish prognosis for Nio going forward, one investor, known by the pseudonym Juxtaposed Ideas, believes the current surge in share prices has gone a bit too far.
“While we remain optimistic about NIO’s long-term prospects, we believe that the recent rally has been overly fast and furious,” writes the 5-star investor.
According to Juxtaposed, there are plenty of reasons to be upbeat about Nio, including its growing delivery numbers, Chinese government efforts to promote EV adoption, and healthy stores of cash on its balance sheet.
Nio’s valuation, though slightly higher than its Chinese peers, “remains attractive among a moderate retracement,” adds the investor.
All that being said, Juxtaposed is preaching patience for the time being, as the investor is concerned that Nio “has seemingly hit a ceiling at $7s.”
The investor is concerned that a rough patch could be on the horizon for reasons both specific to Nio and more macro in nature.
“With the US election campaigns still ongoing and trade war likely to continue, we believe that a near-term pullback may be inevitable, especially given the automaker’s ongoing cash burn and higher initial operating/marketing expenses from the Q4’24 mass market launches,” Juxtaposed explained.
Although maintaining a long-term Buy rating, Juxtaposed Ideas advises investors “to wait for a moderate retracement to its previous trading ranges at $5s for an opportunity to lower their dollar cost averages.” (To watch the Juxtaposed Ideas’ track record, click here)
Wall Street’s outlook on Nio is also somewhat divided. The stock currently holds a consensus rating of Moderate Buy, based on 7 Buy, 4 Hold, and 1 Sell ratings. However, with a 12-month price target of $6.15, this implies a potential downside of ~9%. (See NIO stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
