NIO stock has been in reverse in recent months and the selling could continue into 2025, Goldman Sachs analysts said Monday.
NIO's outperformance has fizzled out as the market sent its investors back to reality on its unprofitable business. Management has committed to reaching breakeven profitability by 2026. However, its execution in its new growth segments is pivotal. NIO reportedly has a 48% market share in its core premium segment. Yet, it has not been sufficient to reach sustainable profitability.
Nio (NIO 2.98%) said that cash flow is improving, deliveries are expected to double, and the company could reach profitability in 2026.
When observing the global electric vehicle (EV) industry currently, depending on your angle, some investors would conclude there's a China problem. Chinese EV makers have been heavily subsidized by the government, which has given domestic automakers a significant advantage on developing EV technology and infrastructure, and at lower costs.
Nio (NIO 2.98%) told investors it hit a critical milestone in becoming a self-sustaining business.
The stock for this Chinese electric vehicle maker still trades below its IPO price.
NIO reported better than expected Q3 earnings, but missed on revenue on Wednesday. NIO achieved record deliveries in the third-quarter and improved vehicle margins to 13.1%. The EV maker is seeing solid momentum for its ONVO-branded EVs and is guiding for a significant ramp in deliveries until March 2025.
NIO's 3Q24 earnings reaffirm my long-term positive sentiment. I reiterate my buy rating while disclaiming that this stock is not for the faint-hearted. I update my positive outlook this quarter and now expect growth to be supported by the new L60 vehicle and international expansion efforts, prioritizing profitability. NIO's stock underperforms peers and the S&P500, but Beijing's stimulus plan and economic revival efforts should benefit the EV sector in China.
Nio's Q3 revenues beat estimates, with improved gross margins, and management is targeting positive net income for 2026. The Onvo launch has started to boost delivery volumes, but the production ramp and Q4 guidance disappointed analysts. Nio's balance sheet showed a sequential working capital decline, though it was free cash flow positive in Q3.
While NIO's Q3 earnings and revenues fall short of expectations, growth drivers make it worth holding onto.
NIO Inc. NIO, the Chinese electric vehicle (EV) maker, is seeing its shares trade lower in premarket trading on Thursday.
For fourth-quarter 2024, NIO projects deliveries in the range of 72,000-75,000 vehicles, implying a rise of 43.9-49.9% year over year.