Nio’s shares rallied after the company announced major price cuts on its products. In its latest balance sheet, it reported sales growth in the first quarter, but below the expected consensus.
Just two months ago Nio’s executives were convinced that they would not copy the attitude of Tesla, which sharply cut the prices of its vehicles. However, the Chinese automaker did a 180-degree turn when its sales fell sharply in recent months.
It was like that a few days ago announced that the price of their electric models will be reduced by 30,000 yuan (about 4,000 euros). With this, they announced that they will seek to reach a new target audience and face other Chinese car companies. But the other side of this decision was the company stopped offering its battery exchange service for free.
It should be noted that the company presented a week ago its balance sheet and did not meet market expectations. For the second quarter of this year, the company Nio indicated a delivery volume of 23,000 and 25,000 electric vehiclesthis represents a 8.2% decrease compared to the previous year.
However, the company shot up almost 25% in recent days on Wall Street (a similar figure registered its Cedear on the local stock market) and closed this Thursday at u$s9.79. Despite this, the rating agencies do not view the company’s numbers with such good eyes: Nomura/Instinet downgraded the buy firm to neutral and cut its price target from $25.80 to $7.50. For his part, CMB International Securities downgraded its Buy rating to Hold and its price target from $21.00 to $8.50.
Regarding your balance, analyst Andrés Ordóñezspecified in Investing: “Nio still has a lot of ground left to stabilize his balance. The delivery imbalance is one of the catalysts that should be looked at in the future when determining purchase points for investment in the company., since it is difficult to consider that Nio can achieve earnings per positive action if they do not maintain a good pace in deliveries. Delays or complications in the production process could affect customer satisfaction and the company’s reputation.”
Source: Ambito
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