Nio Inc (NYSE:) stock has struggled in recent years, and many investors are hoping for an upturn in the Chinese electric car company's fortunes.
However, an investment bank said in a note this week that the consensus full-year forecast is “at significant risk” and that the stock could have further downside.
Weakness of Nio stock
Nio's stock price is down considerably from its 2021 highs of over $65 per share. The company's stock price is currently hovering around $4.64 (as of April 1, 2024 closing price), after declining 48% in 2024 and 55% in the past 12 months.
In pre-market Tuesday, Nio stock fell another 2% after rising more than 3% in pre-market trading following its latest delivery report of 11,866 vehicles delivered in March, an increase of 45.9% month over month. did.
Still, sales in the first quarter were 30,053 units, falling short of expectations of 31,000 to 33,000 units.
In response to this report, Morgan Stanley reiterated its overweight rating on Nio and its price target of $10 per share. The bank said that based on weekly sales statistics, March sales suggest a significant increase towards the end of the month.
Barclays downgrades Nio stock rating
However, Barclays disagreed, lowering Nio's rating from equal weight to underweight and lowering its price target from $5 to $4 per share.
Analysts at the bank said weak sales in March suggested NIO was struggling to sell 2024 models. The model was launched in March. The company said this puts its 2024 consensus forecast at significant risk.
Barclays said, “NIO's first-quarter deliveries were in line with the revised guidance of 30,000 units provided on March 27, but not as much as the original guidance provided on March 5, as March deliveries were lower than expected.'' “This was below our guidance (31,000-33,000 units).”
“Importantly, this failure reflects weak sales momentum for the new 2024 model, which just went on sale in early March. We believe the limited product launches pose significant risks to NIO's ability to meet this year's Reminder consensus forecast.”
Looking to the long term, Barclays believes China's highly competitive electric vehicle market will become even more competitive.
“In the luxury SUV and sedan segment where NIO competes, Huawei recently entered the market with its best-selling SUV and plans to launch its second model soon, and BYD's high-end brand Danza is offering upgrades to existing models. 'and launch new ones,' Barclays said.
They also highlight the fact that Xiaomi (OTC:) entered the market last weekend with “some highly competitive EV sedan models as well.”
As a result, NIO now faces even more intense direct competition from these “stronger, much larger competitors,” and as a result, Nio “lacks the scale and resources necessary to succeed.” They feel it's possible.
