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Is It Too Late to Buy NIO Stock?


  • Tesla (TSLA) CEO Elon Musk and Morgan Stanley analysts made cautious statements that don’t necessarily bode well for Nio (NIO).
  • However, China’s president may soon push for national technology investments, which would probably benefit Nio.
  • Investors shouldn’t give up on NIO stock as the long-term outlook isn’t entirely negative.
NIO stock - Is It Too Late to Buy NIO Stock?

Source: THINK A / Shutterstock.com

Not everyone, it seems, is massively bullish about China-based electric vehicle manufacturer Nio (NYSE:NIO). For instance, Tesla (NASDAQ:TSLA) CEO Elon Musk and some analysts with Morgan Stanley might feel cautious about China’s economy and its impact on future automotive sales. But regardless of what they say, it’s not too late to buy NIO stock. The company could still get a boost from China’s government.

If successful contrarian investors know one thing, it’s that skepticism is healthy, not something to be feared. As bearish outlooks come in from multiple sources, Nio shares are getting cheaper, and that’s not necessarily a bad thing.

Besides, China’s broader technology sector could soon expand vigorously. The country’s leader just hinted at a national push for innovative tech, and this could prove to be a major boon for Nio.

What’s Happening with NIO Stock?

InvestorPlace contributor Ian Cooper included NIO stock in his list of oversold EV stocks. Cooper is 100% right because Nio shares have fallen far from their 52-week high of $44.27.

Cooper also observed Nio’s ambitious foray into the German, Dutch, Danish and Swedish EV markets. As CEO William Li emphasizes Nio’s “next chapter” in its global development, however, let’s not forget that the automaker still needs to deliver strong results in its home country.

That’s easier said than done, of course. Musk recently expressed a less-than-optimistic stance, saying, “China is experiencing quite a burst of a recession of sorts.” Furthermore, Morgan Stanley analysts recently warned that the impact of China’s Covid-19-related disruptions “seems to be lingering in some areas, affecting not only deliveries but also production of some auto components.”

China May Be Investing in Technology Soon

The warnings from Musk and the Morgan Stanley analysts are duly noted. They might even prompt some investors to give up on Nio.

Yet, abandoning Nio could prove to be a costly mistake. Again, Cooper constructed a strong argument that NIO stock is cheap right now. In other words, much of the current skepticism and anxiety is already priced into the shares.

Besides, Nio could soon get some serious financial backing from China’s government. Reportedly, Chinese President Xi Xinping recently “called for his country to ‘win the battle’ on strategically important technologies.”

In a speech in Beijing, Xi vowed to “gather strength to carry out indigenous and leading scientific and technological research, and resolutely win the battle in key core technologies.” He also expressed support for China’s “technology self-reliance” and promised that the country “will move faster to launch a number of major national projects that are of strategic, big-picture and long-term importance.”

It’s hard to imagine that Xi’s push for domestic technology won’t somehow include EVs and EV infrastructure. Traditionally, China’s government isn’t always known for promoting private enterprise. However, it appears that Xi may soon be willing to financially support Chinese EV manufacturers, and this could include Nio.

So, Is It Too Late to Buy NIO Stock?

Some experts have expressed concerns about China’s economy as a whole, and we can draw conclusions about the nation’s EV market. However, these experts are citing known factors which have likely already been priced into NIO stock.

Meanwhile, President Xi seems prepared to bolster China’s technology sector, and this could be positive for Nio. While no guarantees can be made, the risk-to-reward scenario looks positive for the long term. Therefore, it’s definitely not too late to make a small investment in Nio.

On the date of publication, David Moadel 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.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

Article printed from InvestorPlace Media, https://investorplace.com/2022/10/is-it-too-late-to-buy-nio-stock/.

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