Why NIO Stock Is Charging Higher Today

The stock benefited from an upgrade from Wall Motorway and appropriate data amid the worldwide chip scarcity.

What happened

Shares of Chinese language electrical-car maker NIO (NYSE:NIO) had been Trading greater on Tuesday, after a Wall Motorway analyst upgraded the stock despite a decline in month-to-month deliveries.

As of 11: 30 a.m. EDT, NIO’s American depositary shares had been up about 7.7% from Friday’s closing label.

So what

In a fresh disclose on Tuesday, Citi analyst Jeff Chung raised his bank’s ranking on NIO’s shares to clutch, from neutral, while increasing Citi’s label plan for NIO to $58.30 from $57.60. 

Chung wrote that he now sees China gross sales of “fresh energy autos,” a category that involves electrical autos and hybrids, rising extra instant than he had beforehand expected. He now expects Chinese language consumers to clutch 2.52 million fresh energy autos in 2021 and 7.84 million in 2025, versus the 1.79 million in 2021 and 6.86 million in 2025 he had beforehand forecast. 

For NIO specifically, Chung expects the firm’s record backlogs to increase in the 2d quarter, which can in flip “substantially increase” its revenue and market piece in the 2d half of the year, with fresh merchandise driving extra growth in 2022.  

Chung’s upgrade is a expansive a part of why the stock is up nowadays. 

A dark blue NIO ES8, a large electric luxury crossover SUV.

NIO delivered 1,412 of its flagship ES8 luxurious SUVs in Would possibly presumably well presumably, down 7.3% from April nonetheless up 88% from Would possibly presumably well presumably of 2020. Image supply: NIO.

Now what

Chung’s bullishness about NIO’s record backlog is a sure manner to be aware of the manufacturing components that NIO has confronted in the final couple of months. NIO stated in an announcement on Tuesday morning that it delivered 6,711 autos in Would possibly presumably well presumably, a decline of about 5.5% from April that became once explained by a beget to slice manufacturing amid a global scarcity of semiconductors. 

That became once no surprise, as NIO had warned auto investors in April that it expected chip-linked manufacturing disruptions in the 2d quarter. The correct data — there became once some — is that NIO reiterated its upbeat guidance for 2d-quarter deliveries, because it expects with the plan to building up some of the important variation in June. The firm calm expects to articulate between 21,000 and 22,000 autos in the quarter, roughly double its year-ago entire.

Offered that NIO delivered 13,183 autos in April and Would possibly presumably well presumably, that guidance implies deliveries of between 7,817 and 8,817 in June, which may maybe well presumably be a upward push of between 109% and 136% from June 2020 and a record month for the firm. 

This text represents the knowing of the creator, who may maybe presumably disagree with the “legitimate” recommendation space of a Motley Idiot top charge advisory service. We’re motley! Questioning an investing thesis — even one of our beget — helps us all judge critically about investing and assemble choices that abet us change into smarter, happier, and richer.

John Rosevear has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NIO Inc. The Motley Fool has a disclosure policy.”>

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