Electric vehicle companies have had a difficult start to the year. With the tech sell-off and the overall investor sentiment, EV stocks have seen a decline. Nio (NYSE:NIO) stock dipped to all-time lows and reported a low sales momentum, falling from $45 to $24 in the past six months.
Now the stock is very close to its 52-week low. However, I see it as an opportunity to buy the dip.
I am really bullish on Nio and am of the opinion that the company has the potential to report record deliveries and expand globally. It may take some time for the company to realize its potential, but it will certainly happen.
Q4 Results Should Be Impressive
December was an incredible month for Nio. It reported deliveries as high as 10,489, but momentum slowed in January. The company delivered only 9,652 deliveries in the month. This could be due to the incentive cuts. A decline in deliveries may not be good news, but it is only a small part of the equation when it comes to Nio. The company went from delivering 7,225 vehicles in January 2021 to more than 9,000 deliveries this year.
An overview of the company’s 2021 delivery numbers is nothing but impressive and it shows how far Nio has come. Nio delivered 91,429 vehicles in 2021 and I believe this number will be much higher in 2022.
We must also consider the supply chain issues faced by the company. However, Nio is on track with the production ramp up plans and this problem will soon be a thing of the past. I believe the company will meet the projected numbers when it reports the Q4 results.
Analysts Are Bullish on Nio
Bin Wang, a Credit Suisse analyst, has a price target of $83 per share for Nio stock and considers it a top pick in the auto sector. This target is about 250% higher than the current price. Wang also mentioned that several catalysts are working for the stock, including deliveries of the company’s first sedan and the midsize ET5 sedan it plans to start shipping in September.
Nio also plans to enter more European countries this year and it is planning to enter Sweden, Germany, Denmark, and the Netherlands soon. This will help Nio attract a wider user base and increase sales and revenue, which will impact the bottom line.
Further, out of 10 analysts on TipRanks, nine have a “buy” rating with a price target of $62.08, which is more than a 100% upside from the current level.
If you haven’t had the chance to buy EV stocks, this is a solid opportunity to take a position before it becomes too expensive.
What to do With Nio Stock
There is a lot working in favor of Nio and it is a huge player in the EV market. The company hasn’t achieved profitability yet, but I believe it will beat analyst expectations in the fourth quarter. Nio has been suffering due to several reasons, which temporarily slowed its ability to increase the production capacity. It looks like Nio is well-positioned to expand in the global market and it could be making the move at the right time.
The demand for Nio’s EVs hasn’t diminished, which is proof that the company can capitalize on the increasing global demand for EVs. It could take some time for Nio stock to go back to the highs, but this dip is a solid chance to add it to your portfolio.
Considering the potential of the company, Nio stock looks undervalued and it is unlikely that the stock will perform worse than it did in the past few months.
Buy Nio stock before it reports fourth-quarter earnings.
Originally published on InvestorPlace.com
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.