NIO Stock Price and news: Shares roar higher after Mizuho analyst endorsement

Update March 12: NYSE: NIO has surged 11.40% on Thursday to close at $46.03, completing an impressive comeback from the lows of just above $35 earlier in the week. The EV sector has generally been on the rise – notwithstanding Tesla's factory fire – but that has not been the only reason for the rise. Vijay Rakesh, an analyst with Mizuho, kicked NIO's tires and set a price target of $60. While that is below the 52-week low of $66.99, it provides more upside from current levels. 

---

Stay up to speed with hot stocks' news!

---

NIO and the electric vehicle sector were hot for 2020 with Tesla entering the S&P 500 and EV's becoming more mainstream as consumer demand increased. NIO went from $4.10 to $48.74 in 2020 so clearly, recent profit-taking can't be all that surprising. On Friday it was looking a lot worse but the broader market rallied and NIO moved from a session low of $31.91 to close at $38.11.

NIO is a Chinese electric vehicle (EV) manufacturer designing, manufacturing, and selling smart EV's. NIO is also involved in the autonomous driving sector. 

NIO Stock forecast

One of the main drivers for the depreciation in NIO last week was disappointing results. On Monday of last week, NIO released results. 

EPS was -$0.16 versus an estimate of -$0.07 according to Refinitiv. Revenue came in slightly ahead of expectations at $1.03 billion versus $1.01 billion. This is a rise of 133% from a year earlier. 

Overall NIO had a very good 2020 with revenue more than doubling, deliveries in Q4 were 17,353 versus 8,224 in Q4 2019. Total 2020 vehicle deliveries were 43,728 as against 20,565 in 2019. 

For Q1 2021, the Company expects: "Deliveries of the vehicles to be between 20,000 and 20,500 vehicles, representing an increase of approximately 421% to 434% from the same quarter of 2020, and an increase of approximately 15% to 18% from the fourth quarter of 2020.
Total revenues to be between RMB7,382.3 million (US$1,131.4 million) and RMB7,557.2 million (US$1,158.2 million), representing an increase of approximately 438.1% to 450.8% from the same quarter of 2020, and an increase of approximately 11.2% to 13.8% from the fourth quarter of 2020".

On the earnings conference call, NIO said it will enter the European market and has researched entering the US market according to Reuters. 

The delivery targets for Q1 2021 disappointed investors who had been hoping for a continued strong pace of growth. Q3 to Q4 2020 delivery growth was over 40%. But battery issues and the well-flagged semiconductor problems were mentioned by CEO William Li on the analyst call. 

"For the first half of this year, we would like to be more conservative," "For the second half of this year, we are quite confident about the demand, but we do not have the full visibility yet," he said.

Post these results JP Morgan reduced its price target for NIO from $75 to $70. 

Clearly, while these results showed strong growth in deliveries and revenue, the huge share price appreciation in 202 had priced in this growth and had actually priced in probably stronger growth and outlook.

NIO Stock Forecast

NIO as mentioned had most likely priced in stellar growth numbers so where to from here. Tech and electric vehicle shares have been under pressure as investors switch to more beaten-down stocks that will likely benefit from the reopening of the economy. So profit-taking has hit tech stocks such as Tesla and other big tech names. This has spread across to the EV sector which has had a very strong 2020. Results would need to be truly blow out and outlook for continued growth in order to keep up with the share price appreciation. Once this doesn't or hasn't happened the shares re-value themselves and that is what has happened to NIO.

Added to this is the increased awareness that the playing field for the electric vehicle sector is likely to get a whole lot more crowded. Legacy auto manufacturers will have to switch to electric as this is where demand has shifted from consumers. We are now beyond the point of no return and the lifespan of the combustion vehicle is limited. New car purchases will move increasingly to electric as depreciation for legacy combustion engine vehicles increases. 

This has already started to happen with Volvo saying it will be fully electric globally by 2030, Ford saying it will be fully electric in Europe by 2030, and a host of other manufactures making similar statements.  Tesla had the field to itself for quite a while and was a trailblazer and others like NIO saw opportunities and entered the space. But that space is getting more crowded now, only the strongest will survive. One possibility is that legacy manufacturers may put the sector "in play" by purchasing desirable and affordable EV manufacturers to speed their conversion.

Previous updates

Update March 9: Nio Inc (NYSE: NIO) has extended its decline on Monday, falling by over 7% to close at $35.21. The electric vehicle sector and broader high-technology stocks remained under pressure, but hope may come from Nio's home country. Amid the party gathering, authorities in Beijing have intervened in markets early on Tuesday to lift shares from the bottom. The Shanghai-based EV maker may benefit from this move once premarket trading opens in New York. It is also essential to note that despite seemingly disappointing earnings, some in the industry see an upside in the firm's forward projections.

Update March 8: Shares of Nio Inc (NYSE: NIO) have been extending their downfall with another 2% on Monday, changing hands at $37.36 at the time of writing. If the Chinese electric vehicle maker's equity closes in the red, it would be the fifth consecutive day of falls. At current levels, it is nearing half of the peak price of $66.99 hit several months ago. Is Nio a "buy the dip" stock? At the current market environment, with shares falling, investors would need some calm to become selective.

Update March 10: A nice recovery for tech stocks on Tuesday as the Nasdaq finishes ahead by 4% in a sea of green. EV stocks, in particular, benefited with Tesla adding 20% or that's a modest c.$100 billion gain in its market capitalization! NIO joined the party with a 17% gain to close at $41.35.

Update March 11: Nio Inc (NYSE: NIO) has jumped over 6% early on Wednesday to hit $44. Wednesday's jump comes on top of a "turnaround Tuesday" for shares of the embattled Chinese electric vehicle maker. Investors seem to have fully digested the firm's earnings report and see the upside in future production and sales. Broader stocks are on the rise ahead of a critical ten-year bond auction. 

The author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

This article is for information purposes only. The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice. It is important to perform your own research before making any investment and take independent advice from a registered investment advisor. 

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to accuracy, completeness, or the suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. The author will not be held responsible for information that is found at the end of links posted on this page. 

Errors and omissions excepted.