The last time I weighed in on electric vehicle Nio (NYSE:NIO) stock I said, “Near-term, I’d like to see NIO back to $50. Longer-term, I’d like to see it closer to $67.50, as electric vehicle demand and company deliveries explode higher.”
That was on May 4, as NIO traded around $37.
At the moment, NIO is up above $43, and I still believe it could run back to $67.50.
The U.S., Europe and China are pledging to cut emissions over the next several years, and they all want millions of electric vehicles on the roads. Here in the U.S., the Biden Administration is pushing for EV technology for several reasons, according to NBC News contributor Paul Eisenstein.
“There’s the need to reduce CO2 emissions in order to meet global warming targets. There’s a desire to reduce America’s dependence upon petroleum imports, and there’s also a growing concern that China will wind up dominating the EV segment — something that raises defense, as well as economic, concerns,” he said.
Even major auto companies are boosting spending on electric vehicles. General Motors (NYSE:GM) for example will spend up to $35 billion through 2025. Ford Motor (NYSE:F) even just announced that sales of EV vehicles grew by 117% in June.
Sales Growth and Nio Stock
For the first quarter of 2021, the company delivered 20,060 vehicles. Sales were up to $1.13 billion, an increase of nearly 490% year over year, and 20% quarter over quarter.
Vehicle margins improved to 21.2%, as compared to a negative 7.4% year over year.
“NIO started the year of 2021 with a new quarterly delivery record of 20,060 vehicles in the first quarter, representing a strong growth of 422.7% year over year,” said William Bin Li, founder, chairman, and chief executive officer of NIO, said in a press release. “The overall demand for our products continues to be quite strong, but the supply chain is still facing significant challenges due to the semiconductor shortage.”
Then, for the second quarter, the company delivered another 21,896 vehicles, an increase of nearly 112% year over. Cumulative deliveries were up to 117,597.
Analysts Still Love Nio
HSBC analyst Yuqian Ding upgraded the stock to a buy rating with a target of $69 a share.
Even Citigroup’s Jeff Chung recently increased his price target on NIO to $72 from $58.30. In fact, according to Barron’s, Chung believes NIO can deliver 93,000 vehicles in 2021.
According to Barron’s contributor Al Root, Chung is excited about the higher sales overall as well as the fact that demand in China has grown faster than expected.
“His NIO price target is based on 9 times estimated 2022 sales, up from about 7 times sales,” added Root.
The Bottom Line on NIO Stock
The company is getting set to gain traction in Europe. By September, it has plans to open its first service and delivery center in Oslo. Coupled with the growing demand for electric vehicles all over the world, the move could send NIO back to $67.50 fast.
Better, with the U.S., Europe, and China pledging to cut emissions over the next several years, they all want millions of electric vehicles on the roads.
I’d use any signs of weakness in the NIO stock as an opportunity to buy more. With strong deliveries and revenue growth likely down the road, European expansion plans, and countries demanding electric vehicles, growth isn’t likely to slow. From a current price of $45, I’d like to see NIO back up to $67.50, near-term.
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.
