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NIO Stock Forecast: Stock Reacts Poorly to Good News

  • Nio introduces Onvo L60, a more conventional model with a range of 620 miles.
  • A JPMorgan analyst sets a $5.40 price target on NIO stock.
  • NIO shares fall 7.9% on Wednesday despite the improvement.
  • Lower inflation in the US and retail sales boost the Nasdaq.

Nio (NIO) has introduced a new brand called Onvo that it believes will better compete for the average vehicle customer compared to its current brand, Nio, which focuses on luxury.

After unveiling Onvo's newest model at an event on Wednesday, NIO stock fell nearly 8% despite a positive note from a respected analyst.

Nio fell further behind in Wednesday's session as the broader market triumphed with a report showing inflation trending lower as well as flat retail sales. This news was taken as a sign that the Federal Reserve (Fed) would cut interest rates sooner rather than later, and the NASDAQ notched an impressive 1.4% gain.

Nio Stock News: JPMorgan Upgrades Following Onvo L60 Release

Nio executives presented the Onvo L60 on Wednesday, which should be available to buyers in the third quarter of the year. This mid-range SUV is supposed to compete with the Model Y of Tesla (TSLA ) and will retail for just $30,500.

The L60 features a long range option that will allow drivers to travel up to 620 miles without needing a new charge. Additionally, drivers will be able to change the battery in three minutes at any of the company's more than 1,300 proprietary Nio stations.

The news may have taken some Nio investors by surprise, as it appears the company is dispersing its workers to launch its own independent brand. Additionally, the market is likely to see Onvo's cheaper vehicles as a blow to Nio's gross margins.

JPMorgan doesn't seem to see it that way. Analyst Nick Lai wrote a note this week in which he changed his mind on NIO stock. First, Lai wrote that Nio's battery-as-a-service model would begin to pay off very soon by creating a lower entry price for vehicles. Lai then stated that the electric car maker should benefit from new government policies to boost demand for electric vehicles.

So far in 2024, Nio has already returned to moderate growth, despite a previous period of flat demand. Nick Lai changed his rating on NIO from underweight to neutral, but placed a conservative price target on the stock of $5.40.

Lai said monthly vehicle sales should increase from 15,000 in the second quarter to 23,000 in the fourth, followed by an increase to a gross margin of 12%.

Electric Vehicle FAQs

Electric vehicles or EVs are cars that use rechargeable batteries and electric motors for acceleration instead of internal combustion engines (ICM). They have been around for more than 100 years, but research and development in battery technology was scarce for much of the 20th century. Lithium-ion battery technology advanced enough to produce EVs on a large scale in the late 1990s and 2000s, and sales have continued to increase since then, when the Tesla Roadster was introduced. in 2008. EVs are seen as a means to reduce carbon emissions, as battery electric vehicles (BEVs) themselves produce zero emissions. Other vehicles, called plug-in hybrid electric vehicles (PHEV), use both electric batteries and internal combustion engines.

EVs are growing from a small base, but rose from 9% of global new car sales in 2021 to 14% of the total in 2022. This was an annual growth rate of 65%, and the sector sold 10. 2 million electric vehicles worldwide in 2022. Forecasts indicate that this figure will exceed 16 million in 2023. Around the world, market shares differ greatly from country to country. Almost 88% of new car sales in Norway in 2022 were EVs. On the other hand, in the United States, where much of the modern innovation in EVs was forged, less than 8% of new vehicle sales will be EVs in 2022. The world's largest electric vehicle market, China, recorded a 30% % of electric vehicles that year.

We know you're thinking of Elon Musk, but he's probably more like the father of the contemporary mass-market EV. In 1827, a Hungarian priest named Anyos Jedlik invented the electric motor and used it the following year to propel a type of vehicle. French scientist Gaston Planté invented the lead-acid battery in 1859, and German engineer Andreas Flocken built the first true electric car for the public in 1888. EVs accounted for about 38% of all vehicles sold in the US. around 1900. They began to lose market share rapidly after 1910, when gasoline vehicles became much more affordable. They largely died out until new research programs in the 1990s led to gradual private sector investment in the 2000s.

China's BYD is by far the largest electric vehicle manufacturer in the world. In 2022 it sold 1.8 million electric vehicles and in the second half of the year it represented 20% of the world market. The asterisk to BYD is that the vast majority of these vehicles are hybrids. Tesla's 12% market share is often considered more significant than BYD's, because it only sells BEVs and is the most famous EV brand in the world. Volkswagen, BMW and Wuling complete the top five. However, as it is a new sector with heavy investments, many emerging companies have flooded the market. Among them are the Chinese companies Nio, Li Auto and Xpeng; a Swedish-Chinese manufacturer called Polestar; and the Americans Lucid and Rivian.

Nio Stock Forecast

Nio stock needs to hold on to the $5.30 level, which it held most of the time in February and March. Otherwise, a break of that level would send the stock back below $4.00. Wednesday's close at $5.33 leaves shareholders in the lurch. Will $5.30 hold up?

The focus of the bulls is whether or not they can break through the $6.00 to $6.30 range. This month two opportunities have been lost. From there to the area of ​​​​$7.00 to $7.30, which served as support during the fourth quarter of 2023, there is a bed of roses.

NIO Daily Chart

Source: Fx Street

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