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Nio: Ahead Of Earnings, This EV Play Looks Compelling

·4 min read

The big day is approaching quickly. Chinese electric vehicle manufacturer Nio (NIO) plans to release its unaudited first-quarter 2021 financial results on April 29, after the markets close.

Without a doubt, the conference call will be of great interest to the trading community. After all, NIO stock is among the most heavily traded electric vehicle (EV) stocks – not quite rivaling Tesla (TSLA), but popular nonetheless.

The company has come a long way, to say the least. Just a year ago, there was talk on social media that Nio’s very existence was imperiled.

Today, there’s no shortage of data to prove the skeptics wrong.

A Quick Look At NIO Stock

Would you believe that as recently as May of last year, NIO was technically a penny stock? (the U.S. Securities and Exchange Commission defines a penny stock as one that’s trading for less than $5).

That was when Nio was still considered a “show-me story.” However, in the following months, NIO stock broke out in a big way.

The rally was relentless, with the stock catapulting to a 52-week high of $66.99 on January 11, 2021. Clearly, in early 2021, NIO’s days as a penny stock were in the rear-view mirror.

By April 23, the stock had moved back to the $41 level. This is perfectly normal and healthy after such a powerful run-up in the share price.

So now, we’re about to encounter what could be a make-or-break earnings event. Is this the catalyst that NIO needs to reclaim the $67-ish prior peak?

Only time will tell, but recent data strongly suggests that Nio is continuing to deliver – literally.

Undeniable Growth

There’s no other way to say it: Nio’s update for the company’s March and first-quarter 2021 vehicle deliveries was nothing less than spectacular.

It’s not every day that you’ll encounter percentages like these. We’ll start with the month of March, in which Nio delivered a total of 7,257 vehicles. That’s a fresh monthly record for the company, and it represents eye-popping 373% year-over-year growth.

When we step back and analyze the full first quarter, the picture becomes even brighter. Nio delivered 20,060 vehicles during those three months, marking a new quarterly record for the company and signifying a 423% year-over-year improvement.

Plenty Of Room

As of March 31, 2021, Nio delivered 95,701 ES8, ES6 and EC6 model vehicles in total. That’s pretty impressive for a niche-market startup.

Bear in mind, plenty of investors are snapping up shares of electric vehicle companies that haven’t actually delivered any vehicles to the public yet, such as Canoo (GOEV).

What’s great about Nio is that the company’s vehicles are already on the roads.

For the time being, though, NIO investors will need to be patient as the company continues to grow. It’s tempting to point to Tesla’s much larger vehicle-delivery numbers (184,000 during the first quarter of 2021) and feel frustrated because Nio isn’t there yet.

That said, there’s room for more than one electric vehicle company to succeed in 2021 and beyond. As long as the industry is expanding and governments are promoting clean energy initiatives, Nio will have its place in this fast-emerging niche-to-mainstream market.

Analysts Weigh In

Turning to the analyst community, 7 Buys and 3 Holds have been assigned in the last three months. So, the consensus rating is a Moderate Buy. At $60.84, the average analyst price target suggests 48% upside potential. (See Nio stock analysis on TipRanks)

Takeaway

Investors should be aware that earnings events can be unpredictable, and the market’s response to released data can be somewhat irrational.

Therefore, a patient position with a long-term view could be the best approach. Earnings events will come and go, but Nio’s robust delivery growth should sustain the company for the foreseeable future.

Disclosure: On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.