Nio Sinks 10% Despite Higher November Deliveries; Goldman Upgrades To Hold

Shares of China’s leading electric vehicle maker Nio plunged 10.2% on Tuesday even as the company reported strong delivery numbers for November and Goldman Sachs flipped to a Hold rating from Sell.

The company delivered 5,291 vehicles in November, reflecting 109.3% year-over-year growth. Nio’s (NIO) November deliveries included 1,387 ES8s (its flagship 6-seater and 7-seater smart electric SUVs), 2,386 ES6s (5-seater premium smart electric SUV) and 1,518 EC6s (5-seater premium electric coupe SUV). Overall, the company has delivered 36,721 vehicles so far this year.

Nio also stated that it is accelerating its production capacity expansion in December to meet the increasing demand. The company’s latest delivery numbers reflect that consumer discretionary spending on big-ticket items like cars has bounced back strongly in China, the largest EV market in the world. (See NIO stock analysis on TipRanks)

Nio’s performance prompted Goldman Sachs analyst Fei Fang to upgrade the stock to Hold from Sell and raise the price target significantly to $59 from $7.70. Explaining the rating upgrade, Fang said, “In hindsight, we underestimated the benefits to Nio from: (1) powertrain breakthroughs, particularly with the cell-to-pack/blade large cell technologies; (2) the introduction of Nio’s battery as a service (BaaS) program, which has significantly expanded Nio’s addressable market; and (3) regulatory incentives that turned around EV market demand from an ongoing decline. Combined, all of these factors have provided significant tailwinds to Nio’s sale volumes.”

The Street has a cautiously optimistic Moderate Buy analyst consensus on Nio based on 7 Buys versus 3 Holds. With Nio ADRs exploding 1,028% year-to-date to $45.36, the average price target of $48.41 indicates an upside potential of 6.7% from current levels.  

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