Nio (NIO) is an EV manufacturer based in China. I am bullish on the stock.
If you truly believe in a company, then if it gets knocked down, you can bet that it will get back up again.
If any EV company embodies the trait of resilience, it’s Nio. During the onset of COVID-19 last yet, there was a sense that this company was going to fail.
Yet, Nio staged an astounding comeback, and loyal investors raked in exceptional profits. However, NIO stock has struggled in 2021 so far. (See NIO stock charts on TipRanks)
Can the company pull off another comeback? Nio is a survivor, so even when times get tough, don’t count this ambitious company out.
A Quick Look at NIO Stock
The rally in NIO stock from $3 to $50 in 2020 was truly amazing. However, even stocks with strong momentum have to take a breather sometimes.
NIO stock started off 2021 at around $53, and the bulls seemed to be fully in control of the price action at that time. Yet, the stock slid to $35 in March, and never really recovered.
Even at the end of August, NIO stock was trading below $40. This is frustrating price action, but buyers might return at any given moment.
At the same time, Nio’s trailing 12-month loss per share is $0.88 cents. This shows that the company is getting close to profitability, and that’s a bullish sign overall.
Acknowledging the Tragedies
It is unfortunate that this summer saw two tragic incidents involving Nio vehicles.
First, on July 30, a Nio vehicle driver was killed in the Chinese city of Shanghai. Reportedly, his EC6 had struck a stone pier and then burst into flames.
The Chinese government is already quite strict, and this incident could cause regulators to apply extra scrutiny to Nio.
Then, on August 12, another tragic incident occurred. In the Chinese city of Fujian, prominent Chinese entrepreneur Lin Wenqin died after his Nio ES8 crashed.
First of all, since Wenqin is well-known, this created even bigger problems for Nio. On top of that, the Nio vehicle’s hands-free driving system was engaged at the time of the crash.
Taking Decisive Action
It’s understandable if investors are fearful that Chinese regulators might apply pressure to Nio. However, the NIO stock price has already taken a hit, so the fears are probably already priced into the stock.
Furthermore, Nio took prompt and decisive action by introducing a new test for users of the company’s Navigation on Pilot (NOP) assisted-driving feature.
Reportedly, the automaker will require drivers to take a short exam focused on the NOP feature.
This should help to assuage Nio investors’ concerns about regulatory risks in China. Clearly, the company is prepared to take the necessary actions to help ensure driver safety.
Wall Street’s Take
According to TipRanks’ analyst rating consensus, NIO is a Strong Buy, based on seven unanimous Buy ratings. The average NIO price target is $66.01, implying 68.1% upside potential.
Bottom Line
The price performance of NIO stock hasn’t been stellar so far in 2021.
Plus, the recent driver-related tragic incidents must be acknowledged.
Still, Nio is taking decisive action to address the issues with its assisted-driving feature. Therefore, a bullish move might be in store for NIO stock soon.
Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.
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