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Nio Stock: Why Is It losing Steam?
Stock Analysis & Ideas

Nio Stock: Why Is It losing Steam?

After gaining about 20% over the past month, the ADR (American Depositary Receipt) of the Chinese EV maker Nio (NIO) is beginning to lose steam.

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What Changed?

The ongoing supply chain challenges and weak October deliveries weighed on Nio stock. 

To provide a little background, the recent momentum in Nio stock reflected its better-than-expected Q3 deliveries. The EV maker delivered 24,439 vehicles in Q3, well above its guidance of 22,500 to 23,500 vehicles. Q3 deliveries recorded more than 100% growth.

Furthermore, Goldman Sachs turned bullish on Nio stock, adding to the market’s euphoria. 

As things were looking up for Nio, supply chain challenges, preparation for new products, and restructuring of the manufacturing lines took a toll on its vehicle deliveries for October. 

Nio stated that it delivered 3,667 vehicles in October 2021, reflecting a year-over-year decline of 27.5%. 

What’s Ahead?

Despite the weak October deliveries, Nio CEO William Bin Li stated that the demand remains elevated, and the “new orders reached a new record high in October.” Li added that the company is focused on securing supply and production for Q4. 

Notably, Nio expects to deliver 23,500 and 25,500 vehicles in Q4. The guidance represents 35.4% to 46.9% growth on a year-over-year basis. However, the forecasted delivery numbers reflect a decline of about 3.8% to an increase of 4.3% on a quarter-over-quarter basis.

Wall Street’s Take

While Nio stock underperformed the Nasdaq composite index by a wide margin on a year-to-date basis, Wall Street maintains a bullish outlook. On TipRanks, Nio sports a Strong Buy rating consensus based on nine Buys and one Hold. 

Furthermore, Nio stock scores a “Perfect 10” on TipRanks’ Smart Score system, indicating that it will likely outperform the market averages.

The average Nio price target of $59.91 implies 46.5% upside potential to current levels.

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

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