NIO Stock’s 97% Plunge: Is the Worst Over or Just Beginning?

InvestorPlace03-28

Shares of Nio (NIO) stock continue to be pummeled by the market. Investors continue to look at the increasingly competitive landscape as bearish long-term. A recent Mizuho analyst price target cut ...

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Let's dive into whether this stock is a buy or not.","collect":0,"end_time":0,"defaultTopTitle":"investorplace.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0820561818.USD":"安联收益及增长平衡基金Cl AM DIS","LU1861220033.SGD":"Blackrock Next Generation Technology A2 SGD-H","LU1861558580.USD":"日兴方舟颠覆性创新基金B","NIO.SI":"蔚来","LU2602419157.SGD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"AC\" (SGD) ACC","LU1551013425.SGD":"Allianz Income and Growth Cl AMg2 DIS H2-SGD","BK4551":"寇图资本持仓","BK4581":"高盛持仓","EVS.SI":"MSCI China Electric Vehicles and Future Mobility ETF-NikkoAM","BK4574":"无人驾驶","BK4511":"特斯拉概念","BK4099":"汽车制造商","NIO":"蔚来","LU0943347566.SGD":"安联收益及增长平衡基金AM H2-SGD","LU1720051108.HKD":"ALLIANZ GLOBAL ARTIFICIAL INTELLIGENCE \"AT\" (HKD) ACC","TSLA":"特斯拉","LU2357305700.SGD":"Allianz Global Artificial Intelligence ET H2-SGD","LU1839511570.USD":"WELLS FARGO GLOBAL FACTOR ENHANCED EQUITY \"I\" (USD) ACC","LU1429558221.USD":"Natixis Loomis Sayles US Growth Equity RA USD","LU1861559042.SGD":"日兴方舟颠覆性创新基金B SGD","LU1435385759.SGD":"Natixis Loomis Sayles US Growth Equity RA SGD-H","LU0708995583.HKD":"TEMPLETON CHINA \"A\" (HKD) ACC","LU1551013342.USD":"Allianz Income and Growth Cl AMg2 DIS USD","BK4592":"伊斯兰概念","LU0056508442.USD":"贝莱德世界科技基金A2","LU0719512351.SGD":"JPMorgan Funds - US Technology A (acc) SGD","09866":"蔚来-SW","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","BK4585":"ETF&股票定投概念","LU2249611893.SGD":"BNP PARIBAS ENERGY TRANSITION \"CRH\" (SGD) ACC","LU1914381329.SGD":"Allianz Best Styles Global Equity Cl ET Acc H2-SGD","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4555":"新能源车","LU0820562030.AUD":"ALLIANZ INCOME AND GROWTH \"AMH2\" (AUDHDG) H2 INC","LU2063271972.USD":"富兰克林创新领域基金","BK4509":"腾讯概念","LU2756315664.SGD":"ALLIANZ INCOME AND GROWTH \"AMI\" (SGDHDG) INC","BK4527":"明星科技股","LU0097036916.USD":"贝莱德美国增长A2 USD","LU0466842654.USD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"A\" (USD) ACC","BK4550":"红杉资本持仓","BK4588":"碎股","LU2087621335.USD":"ALLSPRING GLOBAL FACTOR ENHANCED EQUITY \"A\" (USD) ACC","LU2326559502.SGD":"Natixis Loomis Sayles US Growth Equity P/A SGD-H","LU0689472784.USD":"安联收益及增长基金Cl AM AT Acc","LU1720051017.SGD":"Allianz Global Artificial Intelligence AT Acc H2-SGD","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","LU1861215975.USD":"贝莱德新一代科技基金 A2","LU1548497426.USD":"安联环球人工智能AT Acc"},"translate_title":"蔚来股票暴跌97%：最糟糕的时期已经过去还是刚刚开始？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"TSLA":1,"NIO":1,"NIO.SI":0.6,"09866":0.6,"EVS.SI":0.6},"content_text":"Shares of Nio (NIO) stock continue to be pummeled by the market.\nInvestors continue to look at the increasingly competitive landscape as bearish long-term.\nA recent Mizuho analyst price target cut affirms this perspective, at least from Wall Street.\n \n\n\n\n \n\nSource: Freer / Shutterstock.com\n\n\n\nInvesting in the electric vehicle sector has proved to be the right move for those looking to invest in the next big thing, at least in stalwart companies like Tesla (NASDAQ:TSLA) or BYD Co. (OTCMKTS:BYDDF) over the long-term. Unfortunately for growth investors, companies like Nio (NYSE:NIO) have underperformed. There’s no way around that reality.\nAfter surging from a low of around $1.50 per share in 2019, shares of NIO stock rocketed to an all-time high of more than $62 per share in early 2021. Today, shares of NIO stock now fetch less than $5 each, at the time of writing. \nHaving almost entirely round-tripped in the matter of just a few years, the question is whether Nio is worth buying at current levels, or if this downward momentum will continue. Let’s dive into the company’s challenges, and if we can make a value case for this embattled Chinese EV maker. \nMizuho Downgrades NIO\nWall Street analysts currently appear to be taking the “under” in terms of Nio’s potential right now. A recent downgrade from Vijay Rakesh, a Mizuho Securities analyst, has pegged NIO stock’s value at $5.50 over the next year. That’s a rather concerning price target, implying insignificant upside from current levels.\nThis downgrade negatively affected the stock, which has seen little reprieve over the past week. In fact, NIO stock has dipped from more than $5 per share five trading days ago to below $4.80 at the time of writing. It’s a trend many bulls are hoping will stop.\nThe thing is, near-term EV demand challenges, as well as Nio-specific liquidity issues, are driving this bearish view. Until the company can resolve its cash bleed, and the EV market recovers in terms of its forward demand forecasts, it appears more price target cuts may be in order.\nNIO is Underperforming in the EV Sector\nIn its recent earnings report, Nio disappointed investors by showing 17.10 billion yuan in revenue, which was below expectations. With cash reserves of 57.3 billion yuan, and further capital expenditure expected, the cash bleed story remains a key thorn in the side of Nio investors. \nThat’s especially true, after CEO William Li announced the new ET9 model. More capital will be needed to fund production, and the company just isn’t earning enough to cover its working capital costs. \nDespite a reduced net loss and 4.6% year-over-year sales growth, Nio’s valuation multiple remains competitive, potentially attracting investor interest. That’s the upside with this stock – it’s cheap. \nBut with more major product launches this year, it’s clear the narrative will remain bearish, until the company can produce significant earnings growth. It’s a bottom-up market right now, with most investors focusing on earnings over revenue growth. For a company like Nio, that’s not a great thing.\nPrice wars and increased competition from Tesla in the SUV market Nio is shooting for also doesn’t bode well for the company’s near-term prospects. While Nio has been collaborating on battery swap technology with Chinese partners, this fact has done little to stop the pain of lower share prices being pushed by the market. \nBetter Avoid or Sell NIO\nNIO’s recent earnings report leaves room for interpretation. Despite growth, it remains unprofitable with substantial losses: $776.4 million in the last quarter and $2.9bn annually. \nWhile Tesla took 18 years to turn a profit, Nio is a much younger competitor. So, maybe there’s some value-based approach bulls can hang onto, particularly with the stock trading at current levels.\nThe thing is, rising competition for lower-cost alternatives in the markets Nio is operating in is killing margins. Chinese competitors like BYD offer more affordable (and in some respects, better) EV options, halting Nio’s progress.\nConcerns around Chinese EV demand has also hit all stocks in this sector, though disproportionately affecting Nio. Until something changes, I think the stock remains a sell. \nOn the date of publication, Chris MacDonald 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.\nChris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.Consumer Discretionary, Automotive, Electric Vehicles \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nSubmit\n\n\n\n\n\n\n\nArticle printed from InvestorPlace Media, https://investorplace.com/2024/03/nio-stocks-97-plunge-is-the-worst-over-or-just-beginning/.\n©2024 InvestorPlace Media, LLC","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2422168795"}