Ignore NIO Stock’s Minor Bumps and Hold On as EV Maker Goes Full Growth

Stocks to buy
  • Nio’s (NIO) March delivery numbers are a huge rebound. 
  • The company is also introducing two new models this year.
  • With the electric vehicle maker clearly in a growth stage, NIO stock is a strong buy. 

Shares of EV maker Nio (NYSE:NIO) have consistently declined since the start of the year. There was a time when the company was considered one of the top electric vehicle makers and it showed its potential in the delivery numbers month after month. NIO stock investors rode a 1,172% rise in 2020. 

However, several macroeconomic factors brought that rise to a halt in January 2021 after NIO stock hit an all-time high of $62. It has been declining since then, including a 31% drop in the first three months of this year. There are concerns about the delisting of Chinese companies, supply chain issues, and the war, which has had an impact on the EV maker.

However, investors need to look beyond the temporary lows and see the bigger picture. NIO stock might be down today but it certainly has the potential to pick up. The stock can hit an all-time high this year and the current dip is a good chance to add the stock to your portfolio. Nio is in a growth stage and the company is working to make an impact on the competitive EV industry. With that in mind, let’s dig deeper into why you should hold tight to NIO stock.

NIO NIO Inc. $21.93 (to $$22.19 in April 1 after-hours trading)

Production Numbers Are Growing 

Due to the Lunar New Year holiday, several companies saw slow first-quarter growth and even Nio had downtime before its new EV launch. This may have had an impact on the January and February deliveries but we saw a solid rebound in March delivery numbers.

With a target of 25,000 to 26,000 EVs for the quarter, the company reported deliveries of 25,768 vehicles in the three months ended March 2022, increasing by 28.5% year-over-year. That included 9,985 vehicles in March alone after delivering 9,652 EVs in January and 6,131 EVs in February. Cumulative deliveries of vehicles as of March 31, 2022 reached 192,838.

Despite the supply chain issues, we have consistently seen a rise in the quarterly deliveries which is proof that consumers are enjoying NIO EVs and there is solid demand in the market. Nio ended the year with a cash balance of $8.7 billion and it expects the first-quarter revenues to be between $1.51 million to $1.56 million. It’s looking more and more like Nio will hit the projected numbers.

That said, the company has started deliveries of the ET7, putting 163 owners behind the wheel of that model in March. Besides the ET7, Nio will be launching two new products this year. The EV maker is still in a growth stage and looks like this is only the beginning. Other Chinese car makers also saw big production gains in March.

The earlier Q4 numbers guidance may not have met analysts expectations but the deliveries are certainly growing and this means Nio is doing something right. Once its new manufacturing facility starts operations in the third quarter, there is no looking back for the EV maker.

The Bottom Line On NIO Stock 

ARK Investment’s Cathie Wood also thinks it is a good time to buy NIO stock. The fund manager purchased Nio shares worth $8.4 million for the first time last week for its Ark Autonomous Technology & Robotics ETF (BATS:ARKQ).

Further, Mizuho analyst Vijay Rakesh has a price target of $60 for the stock with a “buy” rating based on the quarterly results. The analyst added that despite the short-term supply headwinds, the company is well-positioned for long-term growth. Further, Nomura analyst Martin Heung has a price target of $51.50 on the stock with a “buy” rating. 

Q4 may not have been an easy three months for the company, the deliveries fell below consensus and there were supply chain issues but it is a matter of the past. Nio is ready for a solid year ahead and if it manages to execute well on the projections, it will be able to see massive growth this year.

Let’s not forget the global expansion and mass-market launch plans that the company is already working on. NIO Stock has long-term potential and it is a buy and hold. 

On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.

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