NIO - NIO Below $5: Investors Seem Way Too Bearish
2024-06-07 06:45:53 ET
Summary
- NIO's Q1 earnings showed improved vehicle margins and a strong forecast for Q2 deliveries, leading to a positive outlook for the firm's shares.
- The launch of NIO's new low-cost EV brand, ONVO, represents an opportunity for the company to attack Tesla in China, but also poses risks to the company's margin trend.
- NIO has the second-highest vehicle margins, after Li Auto.
- The Company has a low price-to-revenue ratio and upside catalysts (profit improvement, ONVO launch, growing vehicle margins).
Electric vehicle start-up NIO ( NIO ) submitted a mixed earnings sheet for the first fiscal quarter on Thursday that thankfully showed a continual trend of vehicle margin improvements. NIO's share price nonetheless dropped 7% after the Q1'24 earnings report, largely due to persistently high losses. NIO also announced the launch of a new, low-cost electric vehicle brand recently in a bid to attack the low-cost EV market segment and challenge Tesla's ( TSLA ) Model Y. I believe NIO still deserves the benefit of the doubt and since deliveries are roaring back in the second-quarter, the risk profile remains skewed to the upside, especially with the kind of valuation that NIO now offers EV investors....
NIO Below $5: Investors Seem Way Too Bearish