The Tesla (NASDAQ:TSLA) of China, Nio (NYSE:NIO) is making big moves this month. Having recently reported first quarter results, the company reported a new high in deliveries. NIO stock has shown volatility over the last few months. The stock was as high as $62 in Feb 2021 and declined to $35 in April 2021. As of close on Thursday, the stock was changing hands at $36.68.
I have always been bullish on NIO stock and believe it has the power to deliver. It could be your best electric vehicle (EV) bet. Despite the pandemic, the company has soared to new highs and achieved strong revenue and deliveries. If you are keen on buying an EV stock, NIO stock will be your best bet.
Despite a powerful Q1, the stock dipped after results. However, the results were impressive and show the company’s strength in the industry. NIO stock is a strong buy with great potential to grow. The company is one of the best in the expanding EV industry. Let’s dig deeper into the results.
Stellar fundamentals
NIO has always impressed with the fundamentals and its Q1 results show that the company is far from its peak. Despite the pandemic and the semiconductor shortage, NIO’s revenue increased 481% as compared to the same quarter the previous year. It reported a revenue of $1.21 billion in the quarter. The gross profit reached $237 million which is a 36% jump from the previous quarter. It is impressive to see that the company went from loss to profit within one year. This is no small feat.
Interestingly, the sales of the company are not restricted to EVs. It has an alternative channel of income that contributes significantly to the total sales. It offers services of battery charging, internet connectivity for the vehicles, and battery swapping. Its sales stood at $88 million which is an increase of 395% from the same quarter previous year.
The company reported a net loss of 48 cents per share. There is a 73% decline in the net loss from the first quarter of 2020. The cash balance was $7.3 billion at the end of March. It is heavily investing in research and development which is certainly showing results. With each product, NIO is targeting a new user group and has an entire product range that fits all types of customers.
The fundamentals and delivery numbers prove that the company has the ability to scale and meet the growing demand of EVs. NIO stock will benefit from the strong Q1 results.
NIO continues to break records in its deliveries. The quarterly deliveries crossed the 20,000 mark for the first time. It hit 20,060 this quarter from 17,353 vehicles in the previous quarter. It shows the company’s ability to scale production despite the chip shortage. In April, the company showed 125% year-over-year growth and delivered 7,102 vehicles.
NIO ready for the European market
Nio is ready to enter the European market in the second half of the year. After posting strong sales in China, the company has a huge European market to attend to. Its rival XPeng (NYSE:XPEV) is already present in Norway.
Currently, Nio has an engineering center and a global design center in Europe and Norway will be its entry point.
The bottom line on NIO stock
Needless to say, NIO is doing very well and it’s not stopping here. The company expects deliveries between 21,000 and 22,000 in the second quarter and total revenue between $1.2 billion and $1.3 billion. Considering the way NIO is growing, the deliveries and revenue seem achievable. That, of course, will lead to a rise in the EPS.
All in all, NIO stock has long-term potential and outstanding fundamentals. The company will continue to impress investors in the coming years and the shares could easily cross $50 again.
Add NIO stock to your portfolio for long-term gains.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.
