Beijing’s regulatory clampdowns have led Chinese stocks to a point of delisting from the U.S. markets and this has had a major impact on several sectors including the electric vehicle industry. Nio (NYSE:NIO) is a major player in the industry but NIO stock has suffered due to these regulations and chip shortage.
The stock was enjoying the highs of $60s in February but has shown volatility since then. It is consistently falling and is trading at $30 today. Despite the current pullback, the stock has is chockfull of potential and could double in 2022. With that in mind, let’s dig deeper into my investment thesis for NIO stock.
NIO Stock Watcher Eye Annual Event
Nio holds a NIO Day event each year and it is a much-anticipated auto event. At this year’s soiree, held Dec. 18, the company unveiled the smart, mid-sized ET5 sedan. It is priced below $41,000 with battery-as-a-service.
This model could give huge competition to Tesla (NASDAQ:TSLA). It has integrated autonomous driving sensors and will come with NIO’s Autonomous Driving (NAD), Adam Super Computing, and Aquila Super Sensing. These technologies will allow the EV to achieve safe driving in all scenarios.
The autonomous features will roll out gradually and can be added as a monthly subscription. It will begin deliveries in September 2022. The company also introduced augmented reality glasses that are integrated with the car. This means the visual experience is equally good. The glasses will display vehicle information and drivers will not have to move their eyes to check the speed. The self-driving software runs on a computer powered by Nvidia (NASDAQ:NVDA) chips, giving users the best of tech.
Nio will start confirming orders for ET7 from January 2022 and the deliveries will begin at the end of March 2022. The company has added 20 new specifications and features to the car. Further, ET7 was slated to enter the European market with Germany and Norway. However, the company has also revealed plans to enter Sweden and Denmark next year. Nio also plans to expand to more than 25 countries worldwide by 2025. This is an ambitious goal and if it turns out well, Nio could become one of the biggest EV players.
If Nio plans to enter new countries next year, it means the company has sorted its production capacity and is on the right track. It is already working on the manufacturing capacity expansion and is expected to double the capacity in the first half of next year. This means the company will not face manufacturing pressure for the coming years and it will be able to handle the growing demand.
The Bottom Line On NIO Stock
Considering the potential of the company, NIO stock looks undervalued and has a long way to go. I strongly believe the stock can double in the coming months. Nio has shown its strength with impressive delivery numbers and having had successful 10K months, it can be rightly said that if not for the supply chain issues, Nio can deliver a lot more.
Despite reporting stellar delivery numbers, the stock remains unloved which could be due to the investor sell-off and the general sentiment in the market.
How NIO stock reacts to the new model and global expansion plans will say a lot about the future of the stock. It doesn’t look like the investors are worried about the delivery numbers or the car but more about the Chinese delisting regulations. However, it does not look like Nio has a lot to worry about. The stock is here to stay and it will go higher in the coming months. Now’s the time to make the most of the NIO stock rise.
On the date of publication, Vandita Jadeja 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.
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.
