In short, there’s currently a lot to like about Nio (NYSE:NIO) stock.
Yes, Chinese stocks still represent plenty of risk as delisting concerns grow more serious than ever. Political machinations are also playing a factor in Nio’s current troubles.
But given just a slight amount of positivity, investors really have a strong opportunity in front of them at present.
The reason to believe in Nio lies both in optimism following Nio’s annual Nio day event and good old fundamental factors. If you believe in them, there’s a reasonable bullish case for Nio stock.
But first, it is necessary to understand why Nio looks underpriced right now.
Real Issues
You can’t really understand why Nio is currently underpriced without the broader context surrounding it. There’s pressure on Chinese firms, that’s no secret. Beijing has clamped down on its home-grown champions, especially those in the tech sector.
One of the most important pieces of news of late which factors into that discussion is Didi Global’s (NYSE:DIDI) announced plans to delist from the New York Stock Exchange a few weeks ago.
That news hit other Chinese firms including Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD) harder than Nio, but it set the scene. It certainly didn’t help Nio at all.
U.S. Politics
Then, on top of that news, there came political news out of the U.S. Sen. Joe Manchin decided that he would not support President Joe Biden’s Build Back Better bill. That essentially harpooned the bill and its chances of passage.
The Build Back Better bill included tax credits for all EV manufacturers. It doesn’t affect Nio because it doesn’t sell vehicles in the U.S., but the news pulled down EV stocks across the board, Nio included.
Those are a few of the broader catalysts that have Nio share prices down to their lowest levels this year. And for those willing to look on the bright side, a strong opportunity is clearly present.
Fundamental Strengths of NIO Stock
The price of any individual stock hinges upon a mix of external forces and fundamental strengths and weaknesses.
Fortunately for Nio, it possesses strengths. Just about every time I write about the company it seems that I note how much progress it continues to make. That means that I continue to be impressed by the company’s ability to increase its deliveries.
November was no different. In my mind, the most impressive stat about Nio is its total deliveries this year. As of Dec. 1, the firm delivered 80,940 vehicles this year. That’s a 120.4% increase over the same period a year ago.
November growth wasn’t quite as strong as that year-to-date overall, but nonetheless it was impressive. Nio delivered 10,878 vehicles in the month, 105.6% greater than November of 2020.
Anyone can go on and on about how Nio continues to perform well by these kinds of metrics. But investors should really consider it because it’s what really matters.
NIO Day
Then, on Dec. 18 the company held its annual NIO Day 2021. It released its plans for the ET5 sedan, which will be available in September of 2022.
It will be available with a monthly subscription service as well. On top of that news, Nio also announced the start of orders for the ET7 sedan will begin on Jan. 20.
In short, most analysts believe Nio is in strong position. However, its issues are simply those which remain out of its control.
Investors are left with a choice: Believe external narratives, or follow the fundamentals. If you do the latter, that might mean you capitalize on shares predicted to rise to roughly $60 relatively soon.
That’s what Nio fundamentally has in store. I continually beat the drum for Nio because I fundamentally believe in its growth narrative. That isn’t slowing and now’s the time to capitalize.
— Alex Sirois
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Source: Investor Place