Nio (NIO) has been among the most talked-about EV-makers in recent years. Following a lackluster share price performance, the car manufacturer’s investment case has evolved from a high-flying growth story to a heavily discounted play. Beyond the current market sentiment, NIO seems poised for a remarkable comeback. When you factor in the company’s surging vehicle deliveries alongside its surprisingly modest valuation, the stock is well-positioned for significant upside in the medium-long term. I’m turning bullish on this stock in advance of a potential re-rating as the market wakes up to this dark horse.
Moreover, Wall Street analysts are clashing on Nio’s future prospects. While Goldman Sachs is bearish, Morgan Stanley is bullish, and J.P. Morgan is neutral. That’s quite a mixed bag. Altogether, analysts forecast more than 20% upside for this Chinese EV-peddling stock. And while the bankers squabble, investors have an opportunity to establish long positions at currently dismayed price levels.
Why is Nio Stock Struggling?
Over the past year, the company has faced a mix of macro headwinds and industry-specific hurdles that dampened investor enthusiasm. The most significant factor is the ongoing brutal price war in China’s EV market, led by Tesla (TSLA) and BYD (BYDDF), which has compelled automakers to cut prices. As a premium brand, NIO has felt the pain on its margins. Tesla’s aggressive discounts, in particular, made it tough for NIO to hold onto its pricing advantage. NIO, therefore, responded by reducing promotional incentives to shore up its bottom line, which led to a short-lived dip in sales volume a few months ago.
China’s broader economic struggles also played a role beyond the EV space. Softer GDP growth, property market concerns, and weakening consumer confidence have created a challenging environment for large discretionary purchases, including electric cars.
Meanwhile, NIO’s continued investments in research and development, production capacity, and battery-swapping infrastructure have deepened its losses in recent quarters. These initiatives are crucial for its future growth but have led to heavy quarterly losses, prompting Wall Street to question NIO’s financial runway. It makes sense, as future funding would be costly today, both debt-wise (interest rates) and equity-wise (weak stock price).
Resilient Fundamentals Support NIO Stock
Despite these obstacles, NIO has been executing at a high level. In Q3, it delivered a record 61,855 vehicles, solidifying its status as the top premium EV brand in China for cars priced over RMB 300,000 (43K). Then, NIO followed up with an even better Q4 on deliveries, shipping 72,689 vehicles for a 45.2% year-over-year jump. Early 2025 data has kept the momentum rolling. January and February deliveries rose 37.9% and 62.2% year-over-year, respectively. These numbers undoubtedly show a continued appetite for NIO’s lineup in a market that’s more crowded than ever.
Nio is competing with some of the world’s most renowned EV makers and has underperformed on a peer comparison basis. However, stock investors looking for value should look at stocks on the dip instead of the high.
Also, it’s worth noting that on NIO Day 2024 in late December, the company unveiled the ET9, a luxury EV poised for deliveries in March 2025. Meanwhile, its upcoming Firefly brand is expected to shake up the compact high-end EV segment, diversifying NIO’s portfolio and reaching new customer bases. Thus, analysts are already penciling in a spike in sales post-March.
Why Next Week’s Earnings Call Could Be NIO’s Game Changer
But let’s not get ahead and talk about post-March sales, as the company is still expected to post its Q4 results early next week. With robust delivery growth, Q4 will likely mark a key moment for NIO. Management expects deliveries between 72,000 and 75,000 for that period, signaling a potential 50% jump from the same quarter a year earlier. Growth on that scale tends to catch Wall Street’s attention, even if it has already been priced in. Investors should be prepared for another quarterly loss, currently projected at $0.34.
From a valuation perspective, NIO appears surprisingly cheap. For context, the stock is trading at just 0.68x its 2025 projected sales. BYD, China’s largest EV maker, trades at 1x sales for 2025. One could argue that NIO is still posting losses, which explains the discount. However, the moment NIO posts a profit at the current valuation, the stock will emerge as a massive bargain, especially with sales projected to continue to grow in the double-digits for years to come. A mix of sales growth and valuation gains could help the stock’s re-rating over this year.
Is Nio a Buy, Sell, or Hold?
Wall Street remains apprehensive about NIO’s investment case, with the stock carrying a Hold consensus rating based on one Buy, four Hold, and one Sell rating over the past three months. However, NIO’s average price target of $5.25 per share implies almost 22% upside potential over the next twelve months.
NIO’s Comeback Is Brewing
NIO’s growth story remains compelling despite its share price languishing in the doldrums for the past year. Like everybody else in the space, NIO has undoubtedly navigated some rough patches. However, when you look at its climbing delivery numbers, this year could be a real turning point. China’s economy is poised for stabilization, and the global EV market is heating up, so NIO is well-positioned to tap into opportunities both at home and abroad.
The market may have discounted its shares due to past and present uncertainties. Still, as clarity emerges, those willing to look beyond its near-term losses, among other worries, may find themselves well rewarded.