Editor’s note: This column is part of InvestorPlace.com’s Best Stocks for 2021 contest. The Reader’s Choice pick for the contest is NIO (NYSE:NIO) stock.
When we last checked in with Nio (NYSE:NIO) back in July, shares were falling from their highest point since February. Now in early October, NIO stock is down nearly 40% from that high. And year-to-date (YTD), shares are down more than 26%.
So when it comes to InvestorPlace.com’s Best Stocks for 2021 contest, NIO stock hasn’t exactly dazzled investors this year. In fact, the electric vehicle (EV) maker is in last place by a decent margin.
However, despite the rocky road it has been on over the past 10 months, Nio still has plenty to boast about. And while it’s unlikely Nio will crack the “Top 5” in our Best Stocks for 2021, there’s still plenty for investors to be excited about with NIO stock.
Delivery Numbers Still Strong
Last week, Nio provided investors with its September and fiscal third quarter delivery update — and the numbers were very solid. Overall Nio delivered 24,439 vehicles during Q3, representing an increase of 100.2% year-over-year (YOY). A little more than 43% of those deliveries came during the month of September — Nio said it rolled out 10,628 cars during the month, an increase of 125.7% YOY.
Why are these numbers impressive? Well, despite the global chip shortage and recent regulatory headwinds from the Chinese government, Nio has continued to increase its delivery figures in each of the first three quarters of 2021. During Q1, the EV manufacturer produced 20,060 vehicles, while boosting that figure to 21,896 in Q2.
So Nio clearly knows how to operate under major pressure, even major pressure on multiple business fronts. If semiconductors can return to normalcy and the crackdown in China begins to slightly ease, NIO stock could make a serious climb from its current and attractive price.
Nio’s Expanding Business
With all of these issues, and shares of NIO stock falling hard in 2021 because of these problems, investors may think it is crazy that the EV firm is talking about expansion. However, with the impressive body of work Nio has to offer, it should truly come as no surprise.
As InvestorPlace.com contributor Faisal Humayun said recently:
“At the end of September, Nio launched the ES8 SUV in Norway. The launch of ET7 in the country is scheduled for next year, and the ET7 is expected to debut in Germany toward the end of 2022.
This is likely to be just the beginning, as Nio founder William Li has said the company is eyeing launches in four more European countries in addition to Germany. These new markets should help accelerate growth in vehicle deliveries in 2022 and beyond.”
Additionally, the pilot launch of Mobileye’s autonomous taxis and ride-hailing services in Germany and Israel next year should be a catalyst for Nio as well. Why? Because Mobileye, Intel’s (NASDAQ:INTC) self-driving vehicle technology unit, made a with Nio to use its SE8 vehicles for the program.
This is massive for Nio because it should eventually help build the Nio brand in a number of European countries. And as Huymayun said, “given Mobileye’s plans to bring self-driving cars to the masses by 2025, a successful pilot program could result in further collaboration between the companies.”
Therefore, these business moves could provide a major boost to NIO stock in Q4 and FY2022.
Bottom Line of NIO Stock
After Nio saw a gargantuan rise in its stock price during all of 2020, it was almost inevitable that shares would experience some correction in 2021.
As we noted, there have been outside factors contributing to this drop in NIO stock this year. However, those negative catalysts won’t last forever. Semiconductor companies will get back on track and the regulatory issues will be ironed out. Nonetheless, as stated above, Nio is still producing strong delivery figures in a “down” year.
We’ll get our next look at earnings sometime in November. Analysts are currently projecting losses per share of 9 cents on revenue of $1.43 billion during Q3. So if Nio can report figures similar to these and another rise in quarterly vehicle deliveries, sentiment is looking up for NIO stock. And with shares currently trading at just under $36, investors should see this as an extremely attractive price.
On the date of publication, Nick Clarkson 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.
Nick Clarkson is a web editor at InvestorPlace.
