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Why is Nio Stock Sliding Ahead of the Q4 print?
Stock Analysis & Ideas

Why is Nio Stock Sliding Ahead of the Q4 print?

Nio Inc. (NIO), a China-based electric vehicle (EV) manufacturer, has been on a declining path for quite some time. The stock has dropped more than 43% in the last six months and closed at $20.26 yesterday, down approximately 2.9%.

A number of macro variables, including China’s economic slowdown, geopolitical concerns, and the prospect of Nio’s stock being delisted from the New York Stock Exchange, have contributed to the drop in the share price. Furthermore, supply chain issues have been a key source of concern for the industry at-large.

Despite the difficulties, NIO’s efforts to expand its production footprint and product portfolio, as well as the high prospects of the EV sector, keep investors interested in the stock.

Earnings Results Could be a Catalyst

The corporation will reveal its fourth-quarter earnings report on Thursday March 24, 2022, after the market close.

Ahead of the earnings results, Deutsche Bank analyst Edison Yu shared his optimistic thoughts on the company’s progress. In terms of delivery, the analyst estimates that Nio is on track to boost its monthly deliveries from 10,000 to 25,000 by the end of the year. However, due to increased costs, he expects the company to record lower gross margins in the current quarter.

Nonetheless, the analyst kept a Buy rating on Nio stock, citing the company’s planned model launches and long-term growth prospects. However, due to macro worries and supply constraints, he lowered the price target to $50 from $70.

Nio Stock Set to Surge

The global demand for electric vehicles is exploding, with China emerging as the world’s fastest-growing EV market. As a result, Chinese EV manufacturers like Nio have enormous growth potential.

Also, Nio has some solid expansion plans in place for 2022. In December of last year, the business announced the ET5, a mid-sized smart EV vehicle that would be available in China in September 2022.

Apart from the ET5, Nio will introduce three more models at different pricing points to appeal to a wider range of consumers. In 2022, the business plans to expand its charging and battery switching network.

Despite the company’s aggressive growth strategy, Nio’s performance is heavily reliant on favorable macroeconomic conditions.

Wall Street’s Take

On TipRanks, Nio stock commands a Strong Buy consensus rating based on 11 Buys and two Holds. As for price targets, the average NIO stock price prediction of $51.05 implies almost 152% upside potential from the current level. NIO closed trading on Monday at a price of $20.26 per share.

Conclusion

Though geopolitical tensions and other variables may continue to be a source of concern, the company’s strong earnings report could help to boost the stock price.

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