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Sport News | Nio has big plans for 2022, but Nio stock recovery could take longer

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Nio has big plans for 2022, but Nio stock recovery could take longer

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Investors in China’s electric vehicle (EV) group Nio (NYSE:NIO) stocks scratched their heads amid the year-long decline. On February 10, 2021, NIO stock hit a high of $64.60 – a price that is now in the rearview mirror.

Source: Robert Way / Shutterstock.com

Then Nio shares hit a 52-week low at $27.52 in late December and closed at $29.12 on Jan. 20, down 48% in the past 12 months and 4.5% since the end of December. beginning of the year (YTD). By comparison, the S&P Kensho Electric Vehicle Index has fallen 21.6% in the past 52 weeks and 6.8% since the start of the year.

Despite falling shares of many electric vehicle names, the industry is growing. For example, sales of new energy vehicles (NEVs) in China, the world’s largest EV market, is expected to top 5 million units in 2022. And EV sales are expected to account for more than 30% of the country’s auto market, reaching at least 7 million units , by 2025.

During this time, The Chinese authorities are reduce EV subsidies for 2022 and will completely withdraw them in 2023. In addition, the government has recently deleted a long term mandate and now allow for “full foreign ownership of passenger car manufacturing” in China.

Intrigued by the prolonged downtrend, NIO stock investors are wondering what might be in store for the company in 2022. Despite the positive outlook for the industry, fierce competition and tight regulations could create new headwinds for NIO. So, investors might want to wait on the sidelines in the short term.

Nio’s Q3 performance

Founded in 2014, Chinese electric vehicle group Nio aims to differentiate itself through its battery swap solutions, Battery as a Service (BaaS) and autonomous driving as a service (ADaaS).

Management issued Third quarter financial results beginning of November. Revenue climbed 116.6% year-over-year (YoY) to RMB 9,805.3 million, or $1.5 billion. Total electric vehicle deliveries reached 24,439 vehicles, up 100.2% from the prior year quarter.

The net loss attributable to ordinary shareholders of NIO amounted to RMB 2.86 billion (or $443.7 million). It increased by more than 140%, mainly due to the increase in operating expenses. Cash and cash equivalents were RMB 47 billion, or $7.3 billion at the end of the quarter.

On these measures, CEO William Bin Li said, “Despite continued supply chain volatility, our teams and partners are working closely to secure supply and production for Q4 2021.”

Meanwhile, recently delivery figures point to a record delivery of 25,034 vehicles in Q4, up 44.3% year-on-year. Total deliveries ended 2021 with 91,429 vehicles, up 109.1% year-on-year. Nio is expected to release its fourth quarter results at the end of February.

Add NIO stocks to portfolios

Among 26 analysts interrogates, NIO stock has a consensus buy rating. Additionally, the consensus of 25 analysts for a 12-month median price target is around $58.43, implying 95% upside potential from current levels. The 12-month price estimates for the stock range between $37.74 and $87.64.

Its price-to-book ratio (P/P) and the price/sales (P/S) ratios stand at 11.9 and 8.5 respectively. By comparison, these measures for You’re here (NASDAQ:TSLA) are a P/B of 37.8 and a P/S of 24.7.

In other words, despite the recent decline, NIO shares still look frothy by traditional valuation metrics. The same goes for TSLA stocks.

Still, the company is attracting attention because of its growth potential. So, despite continued negative market sentiment, investors may wish to keep the stock on their radars with a view to buying around $29 or even less.

Meanwhile, interested readers might also consider investing in an exchange-traded fund (ETF) that also holds NIO stock. Examples include the First Trust NASDAQ Clean Edge Green Energy Index Fund (NASDAQ:QCLN), the Invesco PureBeta FTSE Emerging Markets ETF (BATS:PBEE), the KraneShares MSCI China Clean Technology ETF (NYSEARC:KGRN) or the VanEck Vectors Low Carbon Energy ETF (NYSEARC:SMOG).

Conclusion on NIO shares

Currently, NIO is one of the best-selling electric vehicle manufacturers in China. It sells a number of car models, including a coupe sports car and three SUV models. Since last September, Nio has been selling its ES8 model in Norway also. The company plans to expand to five other European countries in 2022 and more than 25 countries worldwide by 2025.

In addition, this year the management is launching two new models. The luxury sedan ET7, will be available for orders from January 20. Deliveries are expected to begin at the end of March. The other new model, the ET5, is a premium mid-size smart electric sedan. Deliveries are expected to begin in September 2022.

As part of these expansion plans, a second manufacturing plant is under construction at NeoPark in Hefei. The facility, which will help meet growing demand, is expected to be operational around September 2022.

In summary, Nio has a strong product line and offers tangible growth strategies. However, NIO shares could continue to be under pressure in 2022, in part due to tougher competition, higher operational costs and regulatory risks. Given the upcoming tightening measures from the Federal Reserve, investors are also taking money off the table. Therefore, NIO stock could easily continue to slide below $30. Long-term investors may still need to be patient.

OAt the date of publication, Tezcan Gecgil did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

Tezcan Gecgil has worked in investment management for over two decades in the US and UK. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) exam. His passion is options trading based on the technical analysis of fundamentally sound companies. She particularly enjoys setting up covered weekly calls to generate revenue.

Nio has big plans for 2022, but Nio stock recovery could take longer

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