If you glance quickly at China-based electric vehiclen manufacturer Nio’s (NYSE:NIO) monthly delivery numbers, you may be impressed. However, a deeper dive into the data shows that Nio’s EV sales aren’t as spectacular as they might seem. Our NIO stock forecast isn’t ultra-optimistic and we’re assigning the stock a “D” grade.
There’s also a lesson to be learned today. Just because a stock has come down substantially doesn’t always mean it’s due for a recovery. Instead of waiting and hoping that Nio stages a miraculous turnaround, it probably makes a lot more sense to seek wealth-building opportunities elsewhere.
NIO Stock Drops on Tesla’s Warning
Is bad news for rival EV maker Tesla (NASDAQ:TSLA) good news for Nio? Not necessarily, as NIO stock declined 4.7% after Tesla released its fourth-quarter 2023 report.
Tesla’s Q4 2023 adjusted EPS of 71 cents fell short of Wall Street’s call for 73 cents. That sent shock waves through the global EV space, confirming the notion that it’s a highly challenging market now.
Tesla warned that the company’s vehicle-volume growth rate in 2024 might be “notably lower” than it was in 2023. Thus, it’s easy to see why financial traders dumped their NIO stock shares.
It’s reasonable to say that a warning from Tesla, a profitable company, is a bad sign for Nio, an unprofitable company.
InvestorPlace contributor Will Ashworth provided a detailed comparison of Tesla’s financials versus Nio’s, and suffice it to say, Nio isn’t on a fast track to financial success in the current, less-than-ideal EV-market landscape.
Don’t Rely on Nio’s Bullet Points
Press releases can be notorious for only offering positive points and ignoring some of the harsh facts. This may be the case with Nio’s January 2024 EV-delivery update.
During that month, Nio delivered 10,055 vehicles, up 18.2% year over year. If you just read that bullet point, you might walk away with an optimistic feeling about Nio’s future.
However, we encourage you to always dig deeper than a company’s press-release bullet points. The prior month, December 2023, Nio delivered 18,012 vehicles. Therefore, Nio’s EV deliveries fell off a cliff in January versus December.
This is quite disappointing, as December seemed like a good month for Nio. That’s when the company launched an ultra-luxurious electric car called the ET9. This EV might not end up being a big seller, though, since the ET9’s estimated price is a bank-breaking $112,160.
NIO Stock Forecast: The Relentless Drawdown Might Not Be Over Yet
Nio shares have lost a lot of value over the past three years. Tesla’s warning effectively threw a wet blanket on overeager traders’ fantasy of a spectacular comeback for Nio.
Plus, Nio’s sequential drop in EV deliveries is a sign that the company isn’t on the cusp of a huge turnaround. Hence, our NIO stock forecast is that the shares could easily continue to lose value in 2024, so we’re not recommending an investment in Nio now.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
