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Are the Tides Finally Turning for Nio?
Stock Analysis & Ideas

Are the Tides Finally Turning for Nio?

After underperforming the Nasdaq composite index by a significant margin this year, the American Depositary Receipt or ADR of Chinese EV (electric vehicle) maker Nio (NIO) has risen about 16% so far in October. 

Further, TipRanks’ Stock Investors tool indicates that investors who hold portfolios on TipRanks currently have a Very Negative outlook on Nio stock. However, about 0.3% of these investors have increased their exposure to Nio in the last seven days. 

So what has changed? 

To provide a bit of context, Nio ADR slumped due to the overall selling pressure on Chinese stocks. Meanwhile, supply-chain constraints added to its pain. Earlier, citing the supply-chain challenges, Nio lowered its Q3 delivery outlook, following which investors dumped its stock.

However, positive developments, including a rating upgrade from Goldman Sachs and better-than-expected Q3 delivery numbers, are supporting the growth in Nio stock. 

Nio delivered 24,439 vehicles in Q3, much above its forecast of 22,500 to 23,500 vehicles. Further, its deliveries more than doubled on a year-over-year basis. As for September, it delivered 10,628 vehicles globally, which is an all-time monthly record. 

Furthermore, Nio stated that it has completed the first batch of vehicle deliveries in Norway. Meanwhile, CnEVPost, a website focused on EV news, reported that Nio’s Hefei factory has completed a phased renovation. Once the overall upgrade is complete, the annual production capacity of the Hefei plant will double to 240,000 units.

As things are finally looking up for this EV maker and shares are trading at about 38% discount from the 52-week high, I have turned positive on Nio and have a Bullish outlook on its stock. 

Meanwhile, on TipRanks, Nio has received 8 positive analyst reviews for a unanimous Strong Buy consensus rating. Moreover, Nio scores an 8 out of 10 from TipRanks’ Smart Score rating system, implying it will likely outperform the market.

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The average Nio price target of $60.26 implies a 46% upside potential to current levels.

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Disclosure: On the date of publication, Amit Singh had no position in any of the companies discussed in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates, and should be considered for informational purposes only. TipRanks makes no warranties about the completeness, accuracy or reliability of such information. Nothing in this article should be taken as a recommendation or solicitation to purchase or sell securities. Nothing in the article constitutes legal, professional, investment and/or financial advice and/or takes into account the specific needs and/or requirements of an individual, nor does any information in the article constitute a comprehensive or complete statement of the matters or subject discussed therein. TipRanks and its affiliates disclaim all liability or responsibility with respect to the content of the article, and any action taken upon the information in the article is at your own and sole risk. The link to this article does not constitute an endorsement or recommendation by TipRanks or its affiliates. Past performance is not indicative of future results, prices or performance.

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