There are no easy rides these days for Nio (NYSE:NIO). The Chinese EV maker has been grappling with weakening EV demand while it attempts to stand out from the crowd in an increasingly competitive domestic EV market marked by ongoing price wars. Meanwhile, investors have soured on the story too, with the shares down by 50% year-to-date.
Although one of the relatively bright spots in the company’s Q4 report revolved around a better-than-feared outlook for Q1, the shares trended down again on Wednesday after the company walked back on its guide. Nio reduced its sales outlook for the quarter, now forecasting around 30,000 deliveries, compared to the prior expectation of sales between 31,000 to 33,000.
So, should investors hang on and wait for Nio to get its mojo back again or is the company doomed to fail in the current dog eat dog EV environment and not worth sticking around for?
Well, both in a sense, appears to be the opinion of top-rated investor Bohdan Kucheriavyi.
“NIO continues to be in a tough spot as its business continues to suffer from the ongoing price war within the EV industry while its cash burn rate is not significantly improving,” says Kucheriavyi, who believes the company will need additional cash on top of recent liquidity injections in order to keep up with the competition. But that is likely to further affect its financial profile, and looking ahead, Kucheriavyi sees “no major growth catalysts that could improve its bottom-line performance.”
Having said that, while Kucheriavyi previously held a Sell rating on the shares, given the stock’s miserable performance, he has now shifted his short-term view, although he stresses that does not alter the difficult road ahead for the company.
“NIO’s stock has already greatly depreciated in recent months, found a technical support level, and could rebound in the short term thanks to the better macro environment,” Kucheriavyi explained. “That’s the main reason why I’m currently changing the rating from SELL to HOLD. However, NIO is unlikely to be a great long-term play even if you buy its shares at the current price.” (To watch Kucheriavyi’s track record, click here)
8 of Wall Street’s stock pros agree with Kucheriavyi’s stance, also rating the shares a Hold, yet with an additional 7 Buys and 1 Sell, the stock manages a Moderate Buy consensus rating. Amongst the bulls, there are some pretty optimistic takes, and as such, the $6.99 average represents one-year upside of 53% from current levels. (See Nio stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
