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Is Nio Stock the Buy Opportunity of a Lifetime?

Published 04/17/2024, 03:04 AM
Updated 05/27/2024, 01:10 PM

Is Nio Inc Class A ADR (NYSE:NIO) the opportunity of a lifetime?

Although NIO's recent performance may seem disappointing, it is important to evaluate the company's performance in relation to the entire electric vehicle sector.

For example, the S&P Kensho Electric Vehicles index has declined 7.2 percent over the past year. In addition, major electric vehicle companies by market capitalization have suffered significant declines in value, thus showing that NIO is not the only one affected.

And in fact, NIO's decline is not even the worst, with Rivian (NASDAQ:RIVN) suffering an even more drastic drop.

Although the outlook may seem bleak, I have confidence for the future of NIO. One example is the fourth-quarter figures for 2023, in which the company's actual revenues increased by 7.2 percent, exceeding the forecast of $2204-2289 million.

If this trend were to be repeated in the first quarter of 2024, NIO would see a 4.8 percent increase in revenues instead of a contraction.

There is good news on the way for NIO, in addition to the success of the quarter just ended. CEO William Li recently unveiled their innovative new long-life battery pack with a special 14-hour event.

Now, mass production of this pack has officially begun and should become available for purchase as early as next quarter.

To make the purchase of their ET5 sedan more affordable, NIO has decided to offer the battery pack only in rental mode. However, customers also have the option of buying the car without the battery pack, making it a cheaper option and increasing the company's competitiveness.
NIO Fair Value

This strategy has been extremely successful in 2020, increasing sales by 20 percent.

After a long wait, the stock finally reached $4, a price I personally find attractive. I am ready to buy and invest right now. The new arrival of the super battery could give the company a further boost and make it stand out over the competition.

Evaluating a company is a very intricate process, so it is always advisable to rely on a financial advisor and not trade on your own. A good option is INVESTING PRO, our "smart" financial advisor who can help you with your investment strategy.

Using the 12 most important valuation models, INVESTING PRO can determine the true value of a stock. As shown clearly in the image below derived from INVESTING PRO, the stock is significantly undervalued relative to its true value.

After careful analysis of potential market prospects, I decided to invest in the stock with a target of $8. To maximize my gains in a possible long-term sideways phase, I chose to buy an investment certificate that offers a monthly coupon of 1.5 percent if the price remains above 3.05 euros.

The ISIN code is CH1314029567 and it is worth less than the nominal price of 1,000 euros which makes it very attractive.

In my opinion, this company cannot fail, for two reasons: it has significant liquidity and government support.

We look forward to seeing you in the next article! And remember, for successful trading always rely on Investing Pro: an indispensable tool that can help you avoid serious mistakes during your trades. Also, if you buy through this link, you will automatically get a 10% discount! >>> INVESTINGPRO

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