At the moment, investors aren't keen on the electric vehicle (EV) industry. Worries over battery performance in bad weather, slowing sales growth, and poor quarterly results from industry heavyweights have all contributed to a lack of excitement.
This presents possibilities for EV stock bulls to purchase discounted shares of these impacted companies. An example would be an analyst's prediction that the price of Chinese business Nio (NYSE: NIO) will more than double in the next 12 to 18 months, based on his conviction that it is currently an enticing deal.
An investor that is positive on the Nio company just issued a new earnings report. As a result, Tim Hsaio of Morgan Stanley reaffirmed his buy rating and price objective of $13 for the electric vehicle manufacturer's stock.
Since Nio's fourth-quarter top and bottom lines were below analyst expectations, that may not have been the most logical position to adopt.
Unfortunately, the company's revenue projections fell short of what analysts had anticipated, and it is anticipated that deliveries will decline sharply in the current (first) quarter compared to the previous frame. The company's net loss increased significantly compared to the 2022 figure when looking at the full year.
Hsaio, a Nio bull, framed the company's results in a good light. The author of the recent analyst report explained that this was influenced by "larger one-off impacts related to inventory provision, accelerated depreciation on production facilities, and losses on purchase commitments for old ES8, ES6, and EC6 [models]."
The inevitable downturn of a once-popular business is, of course, not unprecedented. The once-inspiring acceleration in EV sales is already showing signs of a slowdown as the vehicles have become ubiquitous on American and Chinese roads. There is a lot of competition in the electric vehicle sector, and companies selling EVs have to change to survive.
Despite Hsaio's excitement for Nio, I still don't think the company has what it takes to become a major player on the world stage, thus I think investors should exercise caution with the stock.
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