Down 40% on the year, now might be the time for investors to scoop up Nio (NYSE:NIO) stock.
It’s been a house of pain for NIO shareholders this year as the stock has struggled mightily.
After peaking at an all-time high of $66.99 a share in early February, Nio’s stock has nearly 50% to $35.
While the shares have made sporadic runs higher, they may be unable to find any traction and continue to sink lower.
The latest sell-off came after Chinese ride-hailing firm Didi Global (NYSE:DIDI) announced plans to delist from the New York Stock Exchange.
This was in response to orders from China’s government, and it prompted a widespread downturn in all Chinese securities listed on U.S. exchanges.
However, looking at Nio’s numbers, there might be room for some optimism.
Solid Delivery Numbers
The first data reason for hope is Nio’s November delivery numbers, which were much better than Wall Street had expected.
The automaker reported that it delivered 10,878 vehicles in the month of November, a 105.6% year-over-year increase.
The company has now delivered 80,940 vehicles year-to-date, representing a 120.4% annual increase. Nio’s cumulative deliveries of its ES8, ES6 and EC6 models have now reached 156,581 vehicles.
The latest delivery numbers blew away Wall Street expectations and proved that Nio continues to fire on all cylinders when it comes to its production.
Nio’s October deliveries of only 3,667 vehicles (a year-over-year decrease of 27.5%) had been disappointing and led to a further slump in the company’s share price.
However, the October slowdown was due to the company restructuring and upgrading its manufacturing lines in China so that it can double its production capacity.
The next step is to begin making its new ET7 luxury sedan that is scheduled to begin rolling off the assembly line in early 2022.
Next year, NIO will also begin shipping its vehicles to Europe. It recently established its first foreign beachhead in Norway and began selling its popular ES8 sport utility vehicle (SUV).
Room to Grow
China is the dominant country when it comes to electric vehicle manufacturing and sales. The nation of 1.4 billion people accounted for 42% of the 2.6 million electric vehicles sold around the world in this year’s first half.
Data from market research firm CleanTechnica shows that BYD is the market leader with a 17% share. It’s followed by SAIC Motors, which controls 16% of the Chinese market.
Tesla (NASDAQ:TSLA) has an 11% market share, and Nio currently has a 3.3% market share. Given how fast China’s EV market is growing, Nio can continue to do very well if it just maintains its current market share.
Nio’s aggressive growth strategy has enabled the company to grow its quarterly revenue at an average year-over-year rate of 150% during the past two years. That torrid rate of expansion could continue as the company expands into Europe and beyond.
The company currently has a market capitalization of about $50 billion and is projecting that it will become profitable in 2023, an event that analysts expect will propel the company’s shares sharply higher.
Buy NIO Stock as It Bottoms
As a company, Nio remains on track and appears to be doing all the right things. It’s worth noting that the company has largely avoided both the semiconductor shortage that has hobbled other automakers this year.
It also has avoided the Chinese government crackdown on many sectors of the economy and individual companies. Nio is preparing to double its manufacturing capacity, introduce an all-new sedan and grow into new markets in Europe in the New Year. Now would be a good time for investors to take a position in Nio shares
Remember, they’re currently trading at half their 52-week high. The 24 analysts who cover the company have a median price target on Nio shares of $58.14, implying an 80% gain from current levels. By all indications, NIO stock is a buy.
On the date of publication, Joel Baglole 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.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
