Nio (NIO) recently reported its cumulative deliveries surpassed 1 million after handing over 27,182 vehicles in January, up a remarkable 96.1% on a year-over-year basis. Yet, despite this high-voltage headline, the electric vehicle (EV) stock short-circuited, losing nearly 5% and dragging the price below a key moving average (20-day) on Feb. 2.
Why? Because investors focused more on the sequential decline. On a month-to-month basis, Nio’s deliveries came in down an alarming 44% in January.
Versus its year-to-date high, NIO stock is down more than 10% at the time of writing.
Should You Buy the Dip in Nio Stock?
Despite this sequential decline, NIO shares remain worth owning primarily because the company’s commitment to profitability is delivering tangible results.
According to Barchart, the Chinese EV specialist is expected to lose $0.07 per share in its current financial quarter, down 85% versus last year.
Nio has successfully evolved into a multi-brand powerhouse, with its family-oriented ONVO and entry-level Firefly brands already contributing thousands of units to the monthly tally.
Put together with a price-to-sales (P/S) multiple of about 0.96x, well below its historical mean and even its smaller U.S. rivals like Rivian (RIVN), NIO now looks like a high-growth tech name trading at a significant discount.
Citi Recommends Buying NIO Shares
Citi analysts continue to see Nio stock hitting $6.90 by the end of this year since the NYSE-listed firm is strong positioned to capture the premium replacement market in China.
According to them, the market is overreacting to seasonal volatility and ignoring the massive 40% to 50% annual growth trajectory that management has mapped out.
Citi’s optimism is also anchored in the company’s improving gross margins, currently hovering around 14% but expected to climb as production scales and battery costs decline.
Moreover, its fleet of over 1 million vehicles is a goldmine of data for its new NIO WorldModel (NWM) artificial intelligence (AI) driving software.
What’s the Consensus Rating on Nio?
Other Wall Street firms seem to agree with Citi’s bullish view, given the consensus rating on NIO currently sits at a “Moderate Buy.”
According to Barchart, the mean target of $6.17 suggests Nio shares could rally roughly 35% from here.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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