Nio (NYSE:NIO) stock is rising strongly today after the company reported healthy July deliveries.
Now, the number of deliveries alone isn’t all that strong, but thankfully there’s more to it than meets the eye.
NIO delivered 7,931 vehicles in July, but this is actually down month-over-month.
And with an early-stage company like this, you want to see sequential growth every month. Growth is integral to Nio, so a lack of growth would appear to be a bad sign.
However, when you look at July’s numbers in the context of everything going on in the technology space, and in the world in general, the company outlook suddenly becomes positive overall.
Remember, the semiconductors chips required to make electric vehicles are in the midst of a massive shortage. There simply aren’t enough chips to satisfy the current demand for EVs.
And yet, against that backdrop, Nio was able to deliver nearly as many EVs as it had delivered last month.
So, although deliveries dropped 2% month-over-month, this isn’t all that bad when you take the semiconductor chip shortage into account. And in fact, deliveries remained above where they were in March, April and May.
With all of that in mind, July’s delivery numbers were great.
Nio is successfully navigating the chip shortage and sustaining a healthy growth trajectory despite the production risks.
And the semiconductor shortage won’t last forever. When it finally abates, the company’s delivery volumes should soar unhindered, and NIO stock will similarly take off.
NIO stock is a solid buy, amidst this multi-month consolidation period, before its big breakout.
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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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