Nio (NYSE:NIO) is now up almost 19 times in the past year. That is incredible. Especially for a company that was almost considered bankrupt at the beginning of the year. Even in the past six months, Nio stock is up 558% over that span, although the stock has been flat in the past month.
Nevertheless, the outlook for Nio is still very bright.
Nio reported fantastic earnings on Nov. 17. In addition, its delivery analysis for November reported on Dec. 1 was also inspiring.
During Q3 Nio reported its vehicle sales grew 146% year-over-year to $628.4 million and were up 22% over Q2. Moreover, deliveries were up 18.1% over the prior quarter to 12,206 in Q3.
Moreover, on Dec. 1 Nio reported that it delivered 5,291 electric vehicles (EVs), which was up 109.3% over the amount last year. That was up 4.66% over the prior month and implies an annual growth rate of 72.9% on a compound monthly basis.
Year-to-date it has delivered 36,721 EVs, up 111.1%. In fact, growth is now accelerating. For example, here is what Nio said about its production capacity:
“NIO is in the process of accelerating the production capacity expansion in December 2020 to accommodate the increasing order growth.”
What This Means for Nio Stock
Let’s try to put some dollar numbers on these forecasts. I will try to make this fairly simple so that we can estimate what NIO stock is worth.
Now we know that from the Q3 earnings report two things. First, Nio delivered 12,206 electric vehicles. Second, they had a total quarterly revenue of $666.6 million (Nio provided the conversion into dollars).
Therefore, we can calculate the average selling price (ASP) of the Q3 EVs. If we divide $666.6 by 12,206 vehicles, the ASP is $54,613.
Using this information, and assuming that ASPs increase by 1% per quarter, I estimate that the company will produce 15,902 EVs in Q4 and 42,277 EVs in 2020 with total revenue of $2.2 billion.
In addition, my forecast for 2021 shows that revenue is set to explode. I increased slightly the monthly average delivery growth to 10% per month.
This works out to a 33% growth quarter over quarter. In addition, I set the ASP increase at 0.5% quarterly.
The chart above shows my forecast that Nio will deliver 130,712 EVs in 2021. In addition, revenue will be $7.313 billion. You can also see in the table here how I came up with this chart.
For example, it shows how the average selling price (ASP) results in the quarterly revenue numbers.
What This Means for NIO Stock
Keep in mind that Nio will deliver less than 8.5% of the deliveries that Tesla (NASDAQ: TSLA) is set to deliver this year, about 500,000. Moreover, Tesla’s revenue is forecast to be $30.7 billion in 2020 and its present market value is $573 billion.
This implies that NIO stock is worth a good deal more than its present price if these forecasts come about. For example, right now, at $59.8 billion, Nio’s market capitalization is about 10% of Tesla’s.
However, by the end of 2021, NIO is forecast to produce about 26% of cars that Tesla will produce this year (i.e., 130,702 divided by 500,000). Its revenue could be $7.3 billion, or 24% of Tesla’s estimated revenue of $30.7 billion.
Therefore, the Nio stock market capitalization in one year should probably be about 24% or 25% of Tesla’s right now. That implies it will rise to $143.25 billion (i.e., 25% x $573 billion).
Therefore, assuming no more capital raises, and not taking into account profitability differences, NIO stock will be worth 2.395 times its present price. This is seen by dividing the forecast 2021 market cap of $143.25 billion by its present market cap of $59.8 billion.
In addition, this implies NIO stock will rise to $100.54 over the next year (i.e., 2.395 times its price today, Dec. 11, of $41.98 per share).
So hang on to your hat. If Nio continues in this growth trajectory we can expect NIO stock could rise 140% over the next year.
On the date of publication, Mark R. Hake had a long position in Tesla (TSLA)stock.