NIO stock impresses with its long term strength, but there’s plenty of opportunity elsewhere.
With countries, investors and companies piling cash into EVs, there’s big opportunity in this space. But, despite being in a red-hot sector, there’s no reason to plug into Nio Inc (NYSE:NIO) stock right now.
Nio has presented very good sales figures for the third quarter. The share subsequently climbed to a new all-time high and the potential is not yet exhausted, so what is NIO stock waiting for?
Bullish case for NIO: The Chinese EV manufacturer delivered 4,708 vehicles in September. An increase of 133.2 percent compared to the previous year. In the entire 2020, the year-on-year increase was even bigger: Nio sold 12,206 vehicles. An increase of 154.3 percent. Consumers now increasingly perceive the electric car manufacturer as a “next iconic brand” with first-class technology and first-class service, according to analyst Edison Yu from Deutsche Bank.
The positive trend should continue at Nio
One of the reasons for this is the recent sales launch of the new EC6 SUV coupé. A fully electric EE7 sedan will also come onto the market this year. One reason why Deutsche Bank analyst Yu expects record deliveries and margins again for the fourth quarter of 2020.
Nio was not only able to shine with its sales figures, the battery change concept is also well received. In addition, Nio recently announced that it wanted to set up its own charging network. To this end, 30,000 so-called “destination charging” locations are to be built at hotels, restaurants and shopping centers across the country.
Bearish case for NIO is simple
Stock is not going significantly down, but it is also not gonna go up by much because Nio needs to increase production capacity. New factory is needed. Which won’t happen in the next 12 months. With this capacity 5,000 vehicle deliveries a month is as far as it goes a second factory arrives, which is not that possible given their fragile capital structure. Moving forward, a new founding is needed, which inevitably dilutes shares further.