Tesla sparked its own fever in 2017, when investors bet that electric vehicles (EVs) were going to take over the world. At that time, the company Elon Musk was a phenomenon by surpassing car manufacturers established as General Motors and Ford Motor in market capitalization to become the largest automobile manufacturer in the United States. Some analysts looked beyond the industry and called it “the next Apple“.
Now, Tesla stock is down more than 50% from its 2021 peak, and other stocks in the sector that rose with it are shadows of their former selves. Thus, this Monday, in the pre market, the shares of Tesla gives up almost 2%compared to those of NIO, Chinese competition from Musk’s company thatpresented a weak balance.
Tesla’s big rally, which occurred in 2020 and raised its valuation to over 1.2 billion. The company’s shares climbed 66% that year after more than tripling in 2023.
What is the reason for Tesla’s fall?
Demand for EVs is declining as the wave of enthusiastic early adopters have already bought their cars, and more price-conscious and change-averse consumers are taking longer than expected to adopt a new technology. As a result, Tesla falls 31% from its recent high last July and is one of the biggest percentage drags on the Nasdaq 100 index this 2024
On the other hand, the market is reluctant and avoids Chinese stocks because the nation is considered “uninvestableHowever, those who know where to look and what to look for can find some incredible value opportunities scattered across the Asian powerhouse. There are still several tailwinds for markets to digest. However, everyone is building a potentially bullish case for China.
Not all Chinese stocks are the same. For example, many industries like construction and energy stocks will likely remain in the dark due to a lack of excitement. Other sectors, such as consumer discretionary stocks led by names like Alibaba Group NYSE:BABA, could become more popular with foreign investors. Today, the focus is on the electric vehicle space as a bet for consumer recovery.
Leading the way in that space, which became famous when Warren Buffett bought it almost two decades ago, it’s BYD OTCMKTS: BYDDF, but that stock has already had most of its rally. It is time for Nio NYSE:NIO, a small market cap, to be recognized for its explosive growth potential in this rapidly growing sector of the Chinese economy. Before you get ahead of yourself, here are reasons to research China.
Why Nio?
Starting with the analysts’ perspectives, this stock proposes growth of 40% in its earnings per share for the next twelve months and a net increase of 112%, based on analysts’ price target of $12.3 per share. However, this is the consensus; some think it could go much higher.
How about a lot higher? Analysts at Citigroup NYSE:C think this stock is worth $19.20 per share, which is an increase of 232% from where the stock is trading today. Now, that’s something to note, right?
So what could be making these analysts suddenly so bullish on this EV stock? Well, China has gotten preferential treatment from the largest miner and holder of Chilean lithium reserves, Sociedad Química y Minera de Chile NYSE: SQM.
While the main agreement has been with BYD, the benefits are likely to extend to the rest of the industry colleagues.
According to the address, Nio delivered up to 8,132 vehicles in February alone and a total of 467,781 so far this year. The stock trades at just 1.6 times price-to-sales multiple, so it can be considered a bargain compared to competitors like XPeng NYSE:XPEV, which trade at a higher multiple of 2.4.
Considering the stock is trading at just 37% of its 52-week high price, investors now have another reason to believe it could go much higher. more in its next results presentation on March 5.
February sales in line with reduced expectations
NIO delivered 8.1 thousand vehicles in February, a decrease of 33% year-on-year and 19% month-on-month, in line with market expectations. Deliveries consisted of 4.8 thousand units of SUVs (ES6/7/8, EC6/7), a decrease of 24% month-on-month, and 3.4 thousand units of sedans, a decrease of 10% month-on-month.
It is worth watching whether extended promotions of over Rmb40k on 2023 models after Chinese New Year can support a stronger volumetric recovery in March, alongside refresh deliveries of 2024 models.
All eyes are oní NIO may return to a monthly rate of 15-20 thousand units in the second quarter after the recent channel restructuring and 2024 model updates.
NOP+ National Launch: NIO launched its national NOP+ service on March 1 and announced the recruitment of 100 early adopters for its early-stage trial. According to the company, its latest NOP+ could be used outside of Greater China, further demonstrating its algorithm’s ability to adapt to different traffic and driving regulations.
Source: Ambito
I am a 24-year-old writer and journalist who has been working in the news industry for the past two years. I write primarily about market news, so if you’re looking for insights into what’s going on in the stock market or economic indicators, you’ve come to the right place. I also dabble in writing articles on lifestyle trends and pop culture news.
