After a rough year in the doldrums, NIO (NYSE:NIO) finally has a reason to cheer. Despite being down 48% over the past 12 months, the Chinese EV maker’s Q2 results, released last week, were full of bright spots.
NIO’s sales nearly doubled, its margins per vehicle improved by double-digits, and its Q3 delivery guidance of 62,000 vehicles signals another strong quarter-over-quarter gain. Moreover, the company’s revenues surged almost 100% to $2.4 billion, while net losses shrank by 16.7% to $694 million. Although NIO missed revenue expectations by $40 million, this shortfall wasn’t enough to dampen market optimism.
So, could this be the beginning of a bullish period for NIO? While things are indeed looking up, top investor Jonathan Weber believes it’s not yet time to hit the ‘buy’ button.
“NIO is still losing money, and we don’t know when the company will hit profitability,” writes Weber, who is ranked in the top 2% of TipRanks’ stock pros.
On the upside, Weber recognizes NIO’s strong momentum, particularly in capturing market share. “Consumers seem to like NIO’s current product line-up,” he notes, highlighting that NIO’s deliveries more than doubled over the past year, a feat unmatched by global EV sales.
Beyond rising sales, Weber is particularly impressed by the improving vehicle margins, calling it “great news” for the EV maker. This trend, combined with growing sales volumes, could lead to further progress in the months ahead as economies of scale come into play.
“I would thus not be surprised to see NIO generate further vehicle margin improvement during the current quarter and Q4,” Weber went on to add.
However, the lack of profits is hard for Weber to overlook, especially when there are other EV makers that are in the black.
“While NIO could be worthy of a closer look for an enterprising investor who likes its premium line-up, I believe that BYD is a better choice here,” Weber summed up.
Calling NIO a “riskier investment” than other EV companies, Weber is rating the stock as a Neutral for the time being. (To watch Weber’s track record, click here)
Wall Street is slightly more optimistic than Weber. Of the 10 analysts covering the stock, there are 5 Buys, 4 Holds, and 1 Sell, translating to a Moderate Buy consensus rating. The average 12-month price target of $6.06 suggests a potential upside of ~13%. (See NIO stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
