Nio Stock Gets a D Grade: Why Investors Should Steer Clear in H2


  • Nio (NIO) has high current-quarter vehicle-delivery and revenue expectations, which could be a setup for disappointment.
  • Nio’s highly touted Onvo model vehicles might not differ greatly from what Tesla is already offering.
  • Investors shouldn’t be in a hurry to buy NIO stock.
NIO stock - Nio Stock Gets a D Grade: Why Investors Should Steer Clear in H2

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Many methods offer exposure to the global electric vehicle market. Investing in China-based EV manufacturer Nio (NYSE:NIO) simply isn’t your best bet in 2024’s second half. NIO stock had a significant decline in the first half, receiving a “D” grade with little confidence.

Sure, a miracle could happen during the remaining months of the year and Nio’s loyal investors might be vindicated somehow. After all, Nio has high hopes for the current quarter.

But then, when expectations are very high, it’s easy for a company to fall short. If that occurs, NIO stock will have no floor (except for zero) and plenty of room to collapse.

Let’s Have a Convo About Onvo

Now’s as good a time as any to have a “convo” (conversation) about Nio’s highly touted Onvo vehicle model lineup. Believe it or not, Nio expects its Onvo mid-size SUVs to create a “better family life.”

That’s a high calling for an SUV model, to say the least. In order to generate robust revenue, however, Nio’s Onvo vehicles will need to stand out. After all, there’s fierce competition from a slew of EV makers, including the much more famous and well-capitalized Tesla (NASDAQ:TSLA).

However, Onvo might end up being a clone or copycat of vehicles that Tesla has already produced. We found reports suggesting that the Onvo L60 electric SUV features an oval-shaped steering wheel that has minimal buttons, which are similar to components of Tesla’s comparable EV models.

Other Tesla-reminiscent Onvo features may include a glass roof, as well as a gear shifter that’s located below the steering wheel’s right side. We’re not claiming that these similarities are fully confirmed.

Yet, it’s a cause for concern if Nio may be guilty of “borrowing” features of Tesla’s current and past EV models.

Nio’s Great Expectations Could Backfire

As we previously discussed in depth, Nio has to deal with ongoing trade frictions between China and the U.S., as well as between China and Europe. Amid this highly challenging backdrop, one might conclude that Nio ought to maintain muted expectations.

Yet, Nio is actually doubling down with its current-quarter expectations. Stunningly, Nio guided for second-quarter 2024 vehicle deliveries “between 54,000 and 56,000 units.”

We used the word “stunningly” because Nio’s outlook implies that the automaker’s vehicle deliveries will more than double. More specifically, Nio’s guidance range predicts year-over-year vehicle-delivery growth of around 129.6% to 138.1%.

Furthermore, Nio has to overcome international trade frictions and restrictions and nearly double its revenue, somehow.

For the current quarter, Nio expects its revenue to grow by approximately 89.1% to 95.3% year-over-year to the equivalent of $2.373 billion.

That’s a “big ask,” to put it mildly, as Nio contends with tariff-related issues and Tesla’s EV price cuts.

NIO Stock: Don’t Assume a Bounce Is Imminent

It’s entirely understandable if Nio’s loyal shareholders are running out of patience. They lost money on their investment in Nio during 2024’s first half. Now, the year’s second half is starting and Nio has sky-high sales goals.

However, it won’t be easy for Nio to meet or exceed those lofty goals. Frankly, it’s a tough time for China-based EV sellers.

Moreover, Nio is placing an awful lot of emphasis on its Onvo models. This could be problematic if the company doesn’t make its Onvo vehicles more unique.

Consequently, we’re giving NIO stock a “D” grade. Despite Nio’s great expectations, investors shouldn’t expect a miraculous share-price comeback to occur in the near future.

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.

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