This year has been nothing short of a roller coaster ride for Nio (NYSE:NIO) and its investors. Nio stock seemed hopeless even before the onset of the novel coronavirus pandemic. And for a while afterwards, the company and the shareholders were under pressure.
Then, a once-in-a-lifetime turnaround story took shape. You might look through 100 tech stocks and not find a comeback like what we’ve witnessed in Nio stock. This is one that truly rewarded patient shareholders with strong stomachs.
Yet, I’m not one to recommend buying a stock simply because the price went up a lot. In actuality, I’ve seen too many people suffer losses after chasing a high-flying stock.
So now, in order to evaluate Nio stock, we must explore the company’s financial standing. It will take some outstanding results to justify the current Nio stock price. Let’s see what we come up with.
A Closer Look at Nio Stock
The 52-week range of Nio stock paints a wild picture. Believe it or not, in the past year, the share price has been as low as $1.19 and as high as $21.05. It just goes to show that “buy when there’s blood on the streets” can work wonders if you can handle with wide price swings.
Some folks might say that Nio stock simply follows Tesla (NASDAQ:TSLA) stock around like a puppy dog. In response to that, I would point out that the correlation is there but it’s been diminishing lately.
I’ve taken note of recent days when the Nio and Tesla share prices have diverged considerably. That having been said, it’s still worthwhile for Nio stock holders to keep tabs on the Tesla stock price as the latter is considered a bellwether in the electric vehicle space.
There’s No Trouble as the Sales Double
It seems like so long ago, but really it was just earlier this year when Nio’s monthly vehicle deliveries disappointed analysts and investors. If there was any automaker facing an existential crisis, it was Nio.
Thankfully, the company has come a long way since those dark days. Earlier this month, Nio reported that the automaker had delivered 3,965 vehicles during the month of August.
If we had been talking about a giant American automaker, then roughly 4,000 vehicles would be a mere drop in the bucket. For Nio, however, this monthly performance represents a whopping 104.1% year-over-year increase in vehicle deliveries.
Nio founder and Chief Executive William Bin Li reported that a couple of records had been broken for the company. “In August, we achieved our best-ever monthly performance on both deliveries and order growth,” Li stated.
Let the Good Times Roll
Are more record-breaking months in store for Nio? If we’re to believe the company’s founder, the answer to that would be a resounding yes.
“As we continue to improve the production capacity for all NIO products, our monthly capacity will reach 5,000 units in September to support our future deliveries,” specified Li.
If that comes to fruition and Nio’s growth pace continues at this rate, it’s conceivable that Nio could pose a serious threat to Tesla someday. That ambition is far down the road, however, so Nio’s shareholders shouldn’t expect mind-blowing returns in the near term.
Indeed, InvestorPlace contributor Thomas Niel wisely observed, “So far, speculators looking to profit from the ‘next Tesla’ have cut this company a lot of slack.” Niel further advised, “If you bought at lower prices, it’s time to cash out.”
The gist of this article is bullish, but I’m on board with Niel’s recommendation. There’s no need to be greedy if you bought Nio stock at $5 or even at $10.
The Bottom Line
Greed can harm you, so whether I would recommend Nio stock to you depends on whether you already bought it at a lower price. There’s nothing wrong with taking profits if you’re already up by 50% or more.
If you’re considering a small starter position, however, then that’s a different story. In that case, record-setting vehicle deliveries indicate that it’s a good time to add Nio stock as a long-term holding.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
