What’s Happening With Nio Stock?

NIO: Nio logo
NIO
Nio

Chinese luxury electric vehicle maker Nio stock (NYSE:NIO) had a very challenging 2022 with its stock falling by over 70% over the year. There were several factors that weighed the stock down, including persistent supply-chain issues caused by Covid restrictions, and concerns regarding a slowdown in China, following debt issues in the over-leveraged property sector. Moreover, the recent spike in the Omicron novel coronavirus variant in many major Chinese cities has also weighed on the EV sector in the country. While Nio was a leader of sorts in the premium EV space in China, it has now fallen behind its rival Li Auto. While Nio delivered a total of 122,000 vehicles in 2022, Li Auto delivered around 133,000 vehicles. There have also been concerns about the demand for EVs in general, with bellwether Tesla aggressively discounting some of its models in both the U.S. and China and this has also weighed on stocks such as Nio.

Now, Nio’s fundamental performance has actually been pretty strong in recent months. Over the fourth quarter, deliveries stood at 40,052, up by 60% versus last year. This was also well above the average 27,000 vehicles that it delivered over the last three quarters. Nio is also increasing its focus on the European market. While it entered Norway in 2021, the company entered the European market with the launch of the ET7, EL7, and ET5 models and this could help the company drive additional volumes. Moreover, although China is currently seeing a rise in Covid-19 cases, the easing of the zero-Covid policy should prove positive for the economy in 2023, potentially helping automotive stocks such as Nio. We also think Nio’s valuation remains compelling. The stock presently trades at just about 2x estimated 2022 revenues, which is well below Tesla (5x) and Li Auto (3x).  See our analysis of Nio, Xpeng & Li Auto: How Do Chinese EV Stocks Compare? for a detailed look at how Nio stock compares with its rivals Li Auto and Xpeng.

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Returns Jan 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 NIO Return 17% 17% 79%
 S&P 500 Return 4% 4% 78%
 Trefis Multi-Strategy Portfolio 9% 9% 241%
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[1] Month-to-date and year-to-date as of 1/18/2023
[2] Cumulative total returns since the end of 2016

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