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How Nio’s Stock Will React to Recently Posted EV Deliveries

A Nio (NIO) sign outside of the company's facilities in Shanghai, China.

Source: Andy Feng / Shutterstock.com

Weeks after fearful investors dumped Nio (NYSE:NIO) amid a sell-off in Chinese stocks, NIO stock rebounded. It further strengthened its long-running growth story on Apr. 1. Nio posted strong first-quarter deliveries of 9,985 vehicles in March 2022, an increase of 37.6% year-over-year. In the first three months of 2022, Nio delivered 25,768 vehicles, 28.5% more than the year before. The electric vehicle (EV) supplier is a clean energy darling for China. Amid fears that the U.S. will delist Chinese firms and China’s crackdown on technology, clean energy companies are a bright spot. China is eager for the world to praise its commitment to the environment. This sets a long-term growth story for Nio.

On Mar. 28, 2022, Nio started its deliveries of the ET7. This model is a positive catalyst because of its technological leaps. For example, the ET7 has an extra-long range of 1,000 kilometers. Inside, customers enjoy a 12.8-inch AMOLED center display. Its inside assistant, NOMI, has four microphone arrays and a dedicated neural processing unit core. Nio added voiceprint recognition for extra security. Furthermore, NOMI localizes sound to maximize interactions without interruptions.

Markets are forward-looking. When the company introduces the 2022 Nio ES8, ES6, and EC6, investors will anticipate revenue growth accelerating. To maximize customer satisfaction, current Nio owners will enjoy a digital cockpit upgrade in late May 2022. Nio will also introduce the ES7, a new five-seater SUV. Speculators believe that Nio ES7 could replace the ES6. But since the ES6 is Nio’s most affordable mid-sized SUV, investors should dismiss that rumor. Besides, the company needs a wider product line to attract more customers and raise profit margins. In the fourth quarter of 2021, Nio posted a vehicle margin of 20.9%, up from 17.2% in 2020’s fourth quarter.

Investors will gain confidence in owning NIO stock from here. The company posted a nearly 38% year-over-year growth in monthly sales last month. It posted improving gross margins in the fourth quarter. Within a few quarters, the Chinese EV giant will reach break-even. From there, profits will expand, lifted by China’s demand for its 2022 models. Expect Nio shares to trend sharply higher as clean energy investors re-establish a buying position at sharply lower prices in the $20 to $22 range.

On the date of publication, Chris Lau 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.

Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get actionable insight to achieve strong investment returns.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/nio-just-posted-record-electric-vehicle-deliveries-how-nio-stock-will-react/.

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