NIO - NIO Stock Is A Speculative Buy (Upgrade)
2024-03-07 07:55:43 ET
Summary
- Today, I'd like to take a fresh look at NIO's growth prospects in the current "China oversold" reality. Maybe NIO has just bottomed out? Read on.
- NIO reported for Q4 FY2023, beating the quarterly consensus estimates regarding sales (surprise of 1.54%), but missing on the bottom line (surprise of -47.38%).
- NIO's success in terms of gross profit still has a weak leverage effect on EBITDA and net profit. Also, NIO's China BEV market share is likely to get smaller soon.
- But from what I see, the NIO stock price has priced in most of the negatives surrounding the company. A mean reversion is highly likely, in my view.
- So despite NIO's current financial challenges, I believe the stock has a strong likelihood of recovery in the short to medium term.
Introduction
If you have been following me on Seeking Alpha long enough, you might remember my conviction that the risks in Chinese assets (especially in equities) are too high. This opinion formed in my mind back in 2021 when I published my first article on Alibaba Group ( BABA ). At that time, I advised everyone not to buy the stock's dips, pointing out the problems of the Chinese economy, the political system, and the legal peculiarities of the now well-known VIE structure ....
NIO Stock Is A Speculative Buy (Upgrade)