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Saturday, December 3, 2022

Nio Inc (NYSE: NIO) Running Northbound as PCAOB Auditors Set to Leave & EV Sales Increase to 10,059 in October

Nio Inc (NYSE: NIO) rocketed up 17% on Friday on news that US PCAOB auditors are set to leave China and Hong Kong, raising hopes they have finished their inspections and found no wrongdoing. Fear of being delisted was one of the driving catalysts that saw NIO stock decimated over the past year and a half from over $60 in early 2021 to the recent reversal off new 52-week lows of $8.37.  

With the audits behind it and China opening back up NIO should be at the top of every investors watch list. The EV manufacturer is quickly emerging as the dominant player in China, the world’s biggest vehicle market and a Country that recently mandated 25% of new cars sold by 2025 must be EV. Currently NIO shares have 9 recent analyst reviews, all positive, for a Strong Buy consensus rating, with an average price target of $32.97. 


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Nio Inc (NYSE: NIO) operating out of Shanghai, China is a pioneer and a leading company in the premium smart electric vehicle market. NIO differentiates itself through its continuous technological breakthroughs and innovations, such as its industry-leading battery swapping technologies, Battery as a Service, or BaaS, as well as its proprietary autonomous driving technologies and Autonomous Driving as a Service, or ADaaS. NIO’s product portfolio consists of the ES8, a six- or seven-seater flagship premium smart electric SUV, the ES7 (or the EL7), a mid-large five-seater premium smart electric SUV, the ES6, a five-seater high-performance premium smart electric SUV, the EC6, a five-seater premium smart electric coupe SUV, the ET7, a flagship premium smart electric sedan, and the ET5, a mid-size premium smart electric sedan. 

JPMorgan analyst Nick Lai has a Overweight (i.e. Buy) rating on NIO stating: “Nio started delivering vehicles in 2018, and its lineup now contains both compact- and mid-sized sedans and 5-seat SUVs. In addition to the vehicles, Nio has pioneered an approach to make EVs easier for customers to own as the company’s Battery-as-a-Service (BaaS) allows for quick and easy battery swapping, saving customers both time and money on one of the highest-cost routine maintenance procedures in EV ownership. Over the past several years, Nio has reaped the benefits of Chinese government policies that promote the switch from combustion to electric vehicles.” 

For electric-vehicle maker Nio, government tie-up has its benefits - Nikkei AsiaWhile NIO shares are down sharply this year, with the stock having lost 70% of its value Mr. Lai said: “We remain [bullish] on NIO and see positive sales momentum into 2023, driven by: (1) continued growth in the NEV market despite demand deceleration from a high base in 2022 – we expect the industry’s NEV penetration to top 30% in 2023 from 25% in 2022; and (2) our bottom-up projection that NIO will deliver 91% volume growth in 2023, or a 39% CAGR between 2022 and 2025 – for 2023, we believe newly launched models in 2H22 (i.e., ET5 sedan, ES7 SUV and ET7 sedan), the migration of existing old models to a new platform (i.e., ES6, EC6 and ES8 SUVs) and another complete new model (to debut at the annual NIO Day in Dec-22) will drive sales growth and share gains.”  

While Lai is optimistic about NIO going forward with his $14 short term price target, the Street consensus is much more bullish. NIO shares have 9 recent analyst reviews, all positive, for a Strong Buy consensus rating, with an average price target of $32.97. Barclays has decided to maintain their Overweight rating on NIO, at a price target of $19. Mizuho has decided to maintain their Buy rating on NIO, at a price target of $40 per share NIO. 

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NIO

While NIO EV cars are still significantly more expensive than Tesla, in China NIO is quickly becoming the favorite and it’s easy to see why; in China, NIO provides customers with comprehensive and convenient power solutions, the innovative Battery as a Service (BaaS) program, and other user-centric services. Unlike Tesla, which has tried battery swapping but has never deployed it on a large scale and relies instead on its Supercharger network, Nio has built a functioning network; on July 31, 2022 NIO reported the total number of its charging piles in China has exceeded 10,000, reaching 10,071, covering 269 cities. NIO has built a total of 1,039 battery swapping stations for the Chinese market, including 264 on expressways. At the same time, facilities such as battery swapping station are increasing rapidly in China. According to data from the China Electric Vehicle Charging Infrastructure Promotion Alliance, as of June 2022, the number of battery swapping stations in the country had reached 1,582. NIO also has 2,176 supercharging piles, 515 destination charging stations with 2,878 piles and access to more than 400,000+ third-party charging piles.

On November 1 NIO provided its October 2022 delivery update: NIO delivered 10,059 vehicles in October 2022, representing an increase of 174.3% year-over-year. The deliveries consisted of 5,979 premium smart electric SUVs including 2,814 ES7s, and 4,080 premium smart electric sedans including 3,050 ET7s and 1,030 ET5s. The vehicle production and delivery were constrained by operation challenges in our plants as well as supply chain volatilities due to the COVID-19 situations in certain regions in China. Cumulative deliveries of NIO vehicles reached 259,563 as of October 31, 2022. 

In October, NIO unveiled ET7, EL7, and ET5 for the European markets at the NIO Berlin 2022. These products are gradually made available for order in Norway, Germany, the Netherlands, Denmark, and Sweden through NIO Subscription, leasing programs, and direct sales to users. The announced delivery volume represents vehicle deliveries through direct sales to users as well as to the leasing program partner in Europe in accordance with the revenue recognition policy of the Company’s vehicle sales. The vehicles under NIO Subscription in Europe are recognized as assets on the Company’s balance sheet but not counted towards the announced delivery volume. 

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Currently making a powerful move northbound since reversing off $8.37 52-week lows NIO is the Chinese EV Pioneer that is looking to dominate the market and become the Tesla of China and they are well on their way. The demand for NIO EV vehicles is huge and growing fast. NIO delivered 10,059 vehicles in October 2022, representing an increase of 174.3% year-over-year. The vehicle production and delivery were constrained by operation challenges in the Company’s plants as well as supply chain volatilities due to the COVID-19 situations in certain regions in China however this is quickly changing as China opens up once again and eases covid restrictions. Another huge catalyst for NIO is the news that US PCAOB auditors are set to leave China and Hong Kong, raising hopes they have finished their inspections and found no wrongdoing. Fear of delisting left NIO way oversold and now that the stock has reversed northbound again, the audits coming to an end and China opening back up NIO could do big things. We will be updating on NIO when more details emerge so make sure you are subscribed to Microcapdaily.

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Disclosure: we hold no position in NIO either long or short and we have not been compensated for this article.

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