Shares of Nio (NYSE:NIO) and other U.S.-listed Chinese stocks were up on Tuesday as the meeting between U.S. President Joe Biden and Chinese President Xi Jinping raised hopes of better ties between the two countries. Nio stock was also up last week as investors cheered the electric vehicle maker’s Q4 outlook. That said, the stock might remain volatile over the near term due to China’s COVID situation and fears of an economic downturn.
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Overall, Nio shares have plummeted nearly 64% year-to-date due to multiple reasons, including supply chain issues triggered by China’s stringent Zero COVID policy, delisting concerns, and rising costs. Meanwhile, most Wall Street analysts remain optimistic.
Nio’s Q4 Numbers Vital for Stock to Rebound
Nio reported a wider-than-anticipated loss in Q3 as a 32.6% year-over-year rise in revenue was more than offset by higher costs and growth investments. Deliveries grew 29.3% to 31,607 vehicles. However, investors chose to ignore the higher Q3 loss and focused on the management’s Q4 commentary.
Nio expects a “substantial acceleration” in its Q4 revenue growth, backed by efforts to boost production and the solid demand for the ET5 model. The company officially commenced the delivery of ET5 vehicles on September 30 and has been witnessing strong momentum in orders for this electric midsize sedan.
The company expects Q4 deliveries growth in the range of 71.8% to 91.7% and revenue to rise by about 75.4% to 94.2% year-over-year. Nio set these targets even after facing COVID-induced operational challenges in October. It will be important for Nio to meet or exceed its Q4 guidance for its stock to rebound as investors are increasingly worried about the impact of China’s COVID-19 restrictions.
What is the Prediction for Nio Stock?
On Monday, China Renaissance analyst Yiming Wang downgraded Nio stock to a Hold from Buy, with a price target of $12.30. Despite five new models set to be launched in 2023, the analyst opines that the company’s losses will continue to increase due to its “low profitability and high expense ratio.”
Meanwhile, Mizuho Securities analyst Vijay Rakesh lowered the price target for Nio stock to $34 from $40 due to “soft” Q3 results, COVID-19 concerns, increased commodity costs, weak consumer sentiment amid macro challenges, and U.S.-China regulatory tensions. Nonetheless, Rakesh reaffirmed a Buy rating on Nio stock due to the secular trend in the EV market and the company’s strong positioning.
Overall, Nio scores Wall Street’s Strong Buy consensus rating based on nine Buys and two Holds. The average Nio stock price target of $21.89 implies 90.2% upside potential.
Conclusion
Nio stock has been very volatile over recent months and might continue to remain so. While macro challenges and COVID-led disruptions in China could further hurt Nio, most Wall Street analysts are confident about the EV maker’s long-term potential to grow further in China and expand in key markets like Europe.
