Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Nio Stock Revving Up, But Should You Jump On Board?

By MarketBeat.com (Chris Markoch )Stock MarketsJun 18, 2021 06:06AM ET
www.investing.com/analysis/nio-stock-revving-up-but-should-you-jump-on-board-200586898
Nio Stock Revving Up, But Should You Jump On Board?
By MarketBeat.com (Chris Markoch )   |  Jun 18, 2021 06:06AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

It’s been a wild ride for electric vehicle (EV) stocks, and Nio (NYSE:NIO) has been no exception. At a quick glance, the 13% drop in NIO stock for 2021 doesn’t look too bad. However, the stock is down approximately double that since reaching a high of over $60 in February. And without a rally of over 30% over the last 30 days ending June 16, the stock was down 50% from its high.

That’s the definition of a stock going through a bubble. The question for investors is whether the current rally will have legs. Recent analyst reports suggest that will be the case. Demand is likely to remain strong in China, and Nio is beginning to make its European aspirations actionable.

In this article, we’ll look at one of the fascinating companies in the EV sector and let you decide if now is the time to enter, or add to, a position in NIO stock.

More Than an EV Stock?

A recent article in Seeking Alpha made the case that Nio should be analyzed as more than an electric vehicle company. Two of the key catalysts for this assessment are Nio’s Battery-as-a-Service (BaaS) program as well as several patents that support autonomous driving.

In the case of its BaaS program, a partnership with Ford (NYSE:F) is evidence that Nio is finding ways to monetize the service. This may provide the company with an added source of revenue.

The same may be true of its patents which may allow it to license its proprietary technology. One example of this is Nio’s “intelligent cockpit” that is powered by NIO’s artificial intelligence, NOMI.

And, as the Seeking Alpha pointed out, the ability to assemble components of an electric car may take a backseat to the software systems that make up the brains of the vehicle.

Furthermore, having an ability to generate revenue in other ways helps to mask the fact that Nio uses a third party to manufacture its cars. That’s a point that some would say is a weakness of Nio.

Nio is Not Yet Profitable

All of that is well and good. But Nio is not yet profitable and that has to be at least a little concerning to investors. Bulls would point to Tesla (NASDAQ:TSLA) as another example of a company that has a valuation beyond that of a traditional car company. However, Tesla has managed to begin deliver cars and it is firmly entrenched in the United States. Nio is only now starting to get traction outside of its home country.

Furthermore, while Nio’s BaaS service is disrupting the traditional electric charging sector, it’s anyone’s guess as to how long it will remain disruptive. Charging technology is improving. And as a charging network becomes widely available, it may eliminate the primary driver for the company’s battery swap service.

A more pressing concern is the global chip shortage that is causing delays in electric vehicle manufacturing. The chip shortage is projected to last into 2022 so investors are right to expect that Nio may report disappointing delivery numbers for the next several months.

Is It Time to Buy NIO Stock?

From a technical standpoint, NIO stock looks extended. It is trading significantly above both its 50- and 200-day moving averages. And with its relative strength index (RSI) approaching 70, investors may want to wait for a better entry point.

Just two years ago, Nio faced an uncertain future. Now, the company looks to be one of the shining stars in the EV space. However, I would feel better about the stock if the company had more cash on its balance sheet and ultimately, its bottom line. Nio is not there yet and neither is the EV industry.

There’s nothing wrong with believing in NIO as an aspirational stock. But that doesn’t mean you should overpay for it. Right now it may be better to wait for a better entry point. You shouldn’t have to wait long. The stock has a strong support zone between $43.70 and $43.90.

Original Post

Nio Stock Revving Up, But Should You Jump On Board?
 

Related Articles

Nio Stock Revving Up, But Should You Jump On Board?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email