Nio still needs to get its strategic direction sorted out before it can expect to turn profitable in the foreseeable future, particularly for its second brand, Alps, analysts at CMB International said.
(Image credit: CnEVPost)
Nio still needs to sort out its strategic direction before it can expect to turn profitable in the foreseeable future, particularly for its second brand, Alps, CMB International said in a research note today.
Nio's management said in a March 2022 earnings call that the electric vehicle (EV) maker aims to break even in the fourth quarter of 2023 and achieve annual profitability in 2024 for the first time.
However, Nio's deliveries in the first half of 2023 declined as a result of the switch to the NT 2.0 platform for multiple models and intense competition, creating a significant drag on both revenue and gross margin.
On June 9, 2023, the company's management said in another earnings call that Nio may need to push back the point at which it reaches break-even, but the delay will be less than a year.
Nio has yet to announce when it will release its fourth-quarter 2023 earnings. Its local counterpart Li Auto (NASDAQ: LI) will report its fourth-quarter financial results on February 26, before the US stock market opens.
CMB International expects Nio to report a net loss of RMB 4.4 billion ($612 million) in the fourth quarter, narrowing slightly from the third quarter.
Nio's third-quarter net loss was RMB 4.56 billion, up 10.8 percent from the year-ago quarter, while down 24.8 percent from the second quarter, according to its financial results announced on December 5.
In the fourth quarter of 2023, Nio offered lower discounts than other major brands, CMB International noted, adding that they expect the average selling price of Nio's vehicles to slip 2 percent from the third quarter to RMB 309,000.
The impact of the decline in selling price is expected to be offset by lower battery costs, and Nio's vehicle margin is expected to improve by 0.7 percent to 11.7 percent in the fourth quarter from the third quarter, according to the team.
CMB International expects Nio to sell 210,000 vehicles in 2024, with a consolidated gross margin improving to 8.1 percent.
Given the lack of contribution from new models in the first half of the year and internal cannibalization from existing models, Nio's sales growth rate this year is likely to be the lowest among the trio of Chinese EVs listed in the US, the team said. The other two companies are Li Auto and Xpeng (NYSE: XPEV).
Considering the company's move to cut back on non-core businesses, CMB International forecasts Nio is expected to see a year-on-year reduction in research and development and sales and administrative expenses this year, but still post a net loss of up to RMB 14.6 billion for the year.
The team said that last year's investment of more than RMB 20 billion in Nio by the Abu Dhabi sovereign fund can support its growth needs through 2024-2025, a critical window that will determine the company's survival.
($1 = RMB 7.1882)
Nio Alps' 1st model to begin trial production in Jul, aims for tens of thousands of sales in 2024, report says
FAQs
Nio needs to sort out its strategic direction to turn profitable in foreseeable future, analysts say. Nio still needs to get its strategic direction sorted out before it can expect to turn profitable in the foreseeable future, particularly for its second brand, Alps, analysts at CMB International said.
What is the future of NIO company? ›
Average Price Target
Based on 16 Wall Street analysts offering 12 month price targets for Nio in the last 3 months. The average price target is $6.92 with a high forecast of $10.40 and a low forecast of $4.00. The average price target represents a 58.35% change from the last price of $4.37.
Why is NIO going down? ›
For the full year, deliveries rose around 31% from 2022, but its gross margin slumped to only 5.5% from 10.4% in the previous year. Nio's net loss surged almost 44% to $2.9 billion in 2023. Its stock plunged after the earnings report as investors became wary amid a slowdown in the global EV market.
Where will NIO stock be in 5 years? ›
Long-Term NIO Inc. Stock Price Predictions
| Year | Prediction | Change |
|---|
| 2025 | $ 11.55 | 157.72% |
| 2026 | $ 29.76 | 564.19% |
| 2027 | $ 76.69 | 1,611.75% |
| 2028 | $ 197.64 | 4,311.50% |
2 more rowsValuation metrics show that NIO Inc. may be overvalued. Its Value Score of F indicates it would be a bad pick for value investors.
Will NIO turn profitable? ›
Nio's management said in a March 2022 earnings call that the electric vehicle (EV) maker aims to break even in the fourth quarter of 2023 and achieve annual profitability in 2024 for the first time.
Does NIO have a good future? ›
NIO is forecast to grow earnings and revenue by 46.9% and 19.8% per annum respectively. EPS is expected to grow by 55.6% per annum. Return on equity is forecast to be -17.3% in 3 years.
Is NIO stock in trouble? ›
“Down but not out” may be a great way to describe Nio (NYSE:NIO) stock, down more than 50% on the year. Since the height of its popularity in 2021, shares have fallen by nearly 93%. Headwinds have affected the company's performance, leading to poor results.
Is NIO stock undervalued? ›
Are you a shareholder? Since NIO is currently undervalued, it may be a great time to accumulate more of your holdings in the stock.
Is NIO a penny stock? ›
At around $4 per share, Nio stock is not merely in penny stock territory. The Chinese EV play is now a full-on penny stock, and it's likely to stay that way.
NIO looks to be among those names that can survive the current EV industry slump, even as many startup EV companies seem doomed. However, investors should brace for more volatility ahead, as EV companies navigate a tough macro environment that's only made more difficult by the ever-rising competition.
Can NIO stock reach $100? ›
To reach $100 by 2030, NIO stock would need to rise at a CAGR of more than 40% and jump 13.4x from these levels, which would mean a market cap of $180 billion. Realistically speaking, I don't expect NIO stock to reach $100 by 2030 even as at the current depressed valuations, it looks like an EV stock worth considering.
Is NIO a good long-term investment? ›
(OTCMKTS:BYDDF) over the long-term. Unfortunately for growth investors, companies like Nio (NYSE:NIO) have underperformed. There's no way around that reality. After surging from a low of around $1.50 per share in 2019, shares of NIO stock rocketed to an all-time high of more than $62 per share in early 2021.
Did Elon Musk buy NIO stock? ›
after Elon Musk has taken an 11.4 percent stake in a Chinese company aspiring to become an electric vehicle-making rival. Baillie Gifford & Co. disclosed that it owns 85.3 million NIO Inc. shares in a regulatory filing Tuesday. Bloomberg Opinion Columnist Anjani Trivedi weighs in on "Bloomberg Markets: Asia."
Should I sell or hold NIO stock? ›
The consensus among 9 Wall Street analysts covering (NYSE: NIO) stock is to Hold NIO stock.
What is the fair value of NIO? ›
As of 2024-04-28, the Fair Value of NIO Inc (NIO) is -10.19 USD. This value is based on the Peter Lynch's Fair Value formula. With the current market price of 4.49 USD, the upside of NIO Inc is -326.9%. Note: valuation result may not be accurate due to the company's negative EPS.
Can nio stock reach $100? ›
To reach $100 by 2030, NIO stock would need to rise at a CAGR of more than 40% and jump 13.4x from these levels, which would mean a market cap of $180 billion. Realistically speaking, I don't expect NIO stock to reach $100 by 2030 even as at the current depressed valuations, it looks like an EV stock worth considering.
What will NIO stock be worth in 10 years? ›
According to the latest long-term forecast, NIO price will hit $5 by the end of 2024 and then $8 by the end of 2025. NIO will rise to $10 within the year of 2026, $12 in 2027, $15 in 2030, $17 in 2031 and $20 in 2035.
Is NIO a growing company? ›
Growing in a competitive market
The breadth of Nio's sales was particularly noteworthy in March. Sales of its SUV models grew more than 40% month over month while its smart electric sedan sales increased by over 50%. Sales came within expectations that were recently adjusted lower by the company.
How big will nio be? ›
If Nio trades at 6 times sales and steadily grows its revenue at a compound annual growth rate (CAGR) of 12% from $7.8 billion in 2023 to $166.7 billion in 2050, it could be worth $1 trillion by the final year.
