Ignore Today’s Nio News; There’s a Reason Analysts Love NIO Stock

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NIO stock - Ignore Today’s Nio News; There’s a Reason Analysts Love NIO Stock

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China’s NIO (NYSE:NIO) made some big news after announcing many price hikes and production delays for its electric vehicles (EVs). The new Covid-19 wave may have added more challenges to the supply chain. But NIO stock fell sharply after the news. NIO is raising the prices of three of its SUVs by 10,000 yuan, effective May 10, with no changes made to the ET7 and ET5.

According to billionaire Chief Executive Officer William Li, the price of batteries is going up and there is no indication that this will soon change. Nio also had to suspend production due to Covid-19 restrictions in their suppliers’ factories. Nio is not the only EV maker with hiked prices. In addition to Nio, Xpeng (NYSE:XPEV), Li Auto (NASDAQ:LI) and Tesla (NASDAQ:TSLA) recently raised their prices, as well. There is a trend showing that as more automobiles are made and sold, the prices will continue to rise. There are many challenges with the production of cars. However, the supply chain factor remains key right now.

Is NIO Stock a Buy, Sell, or Hold?

Since the start of the year, NIO stock has been under pressure. EV stocks had a great time over the past two years. However, investors seem to have fallen out of favor with unprofitable companies.

NIO is getting better with each passing quarter. Gross margins rose from 8% in the second quarter (Q2) of 2020 to 19% in Q2 of 2021. It looked like Nio was on the verge of turning its operations profitable after its quarterly results in August last year. However, due to the Covid-related disruptions, the company fell into a tailspin.

Nevertheless, the EV maker remains a great prospect, with the launch of three new vehicles this year. UBS Analyst Paul Gong recently revised his rating on the EV maker from “hold” to “buy,” with a price target of $32. In particular, Gong noted that the launches of the ET7 mid/large sedan, ET5 medium sedan, and the mid/large ES7 SUV would hugely impact the company and its prospects.

Intelligent, efficient cars are already hugely popular with the public. And they continue to grow in acceptance. The analyst believes ET5 shares many similarities with its bigger brother ET7. But it also comes in at a lower cost, which can lead to sales of over 10,000 units per month.

Overall, Nio is a company with good prospects this year. In my opinion, as the supply chain issues begin to resolve, NIO stock will continue to get better and become a great investment.

On the publication date, Faizan Farooque 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.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/ignore-todays-nio-news-theres-a-reason-analysts-love-nio-stock/.

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