Nio stock price has done well this year as investors cheered its strong sales and product launches. Its stock was trading at $7 on Monday in New York, up by over 132% from its lowest point this year. So, is it a good stock to buy?
Nio deliveries are soaring
Nio, a top Chinese electric vehicle company, is doing well, with its revenue and deliveries continuing to soar. This growth happened as more Chinese companies took advantage of subsidies that Beijing and other local authorities have offered.
At the same time, the company has offered numerous discounts to match those offered by other firms like BYD and Li Auto, which have become some of the fastest-growing firms in the country.
The most recent results showed that Nio’s deliveries jumped by 64% in September to 34,750. This growth brought it quarterly deliveries to 87,071 vehicles and the cumulative total to 872,785, making it one of the biggest EV companies in China.
The company has benefited from the robust demand of its premium Nio brand whose sales rose to over 13,728 in September.
This growth is then supported by growth in it newer brands like ONVO and FIREFLY. ONVO sales rose to over 15,246, while FIREFLY deliveries were 5,775.
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The most recent results showed that Nio’s revenue rose by 9% yo over $2.6 billion. This revenue growth was lower than other companies, partly because of its discounts as it sought to gain market share in the industry.
Nio’s gross margin rose by 12.4% to over $264 million a its gross margin expanded modestly to 10%. This gross margin figure is much lower than that of other Chinese EV companies like Li Auto and XPeng.
Still, the management believes that it has more room to grow its revenues and margins now that it has launched the ONVO and FIREFLY sub-brands.
Wall Street analysts expect that Nio’s revenue will be CNY 22.3 billion, up by 19.45% in the same period last year. They also expect that the current quarter’s revenue growth will skyrocket by 72% to over 33.9 billion yuan.
As a result, its annual result this year will be 89 billion yuan, followed by 127 billion yuan in the following year.
The main challenge is that Nio loses a lot of money a year. Analyst expect it to lose 7.477 yuan per share this year followed by 4.68 yuan next year. They expect it to break even in 2028, meaning that it may dilute it shareholders again.
Nio stock price technical analysis
Nio stock chart | Source: TradingView
The daily timeframe chart shows that the Nio share price has surged from a low of $3 in April to a high of $8 earlier this month.
It then pulled back to the key support level at $6.30, its lowest level on October 16. It remains above the 50-day and 100-day Exponential Moving Averages, a sign that bulls are in control.
Therefore, the stock will likely continue rising as bulls target the key resistance level at $7.70. However, there is a risk that it may pull back since it has formed a head-and-shoulders-like chart pattern.
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