NIO - NIO: Penny Stock Risk But Shares Are A Bargain

2024-03-07 06:24:00 ET

Summary

• NIO reported mixed Q4 results and submitted light outlook for Q1'24 deliveries.
• The EV maker reported better-than-expected Q4 revenues, but EV demand is slowing which may, together with concerns over near-term profitability, weigh on the company's valuation factor.
• NIO's vehicle margins are improving, however, which was a major takeaway for investors. Stronger margin growth could accelerate the firm's profitability timeline.
• Shares trade at half NIO's 1-year average P/S ratio, implying that investors are overly bearish.

NIO ( NIO ) reported mixed results for the fourth quarter that saw 7 cent EPS miss, but a $70M revenue beat ( Source ). The electric vehicle maker reported single-digit top-line growth for the fourth-quarter and widening losses Q/Q... which were expected. The outlook for Q1'24 was also light and missed consensus expectations. However, the company is making crucial progress when it comes to its vehicle margin trend, which I believe will be the defining theme in FY 2024. With NIO growing into a larger production footprint, vehicle margin expansion could accelerate NIO's profitability timeline. While there is a risk that shares drop into the penny stock zone (a price below $5), shares of NIO are cheap based off of revenues and have revaluation potential in the longer term!...

For further details see: