The object of the stock market is simple, buy at a reasonable price, and earn money through a company’s ascension. That idea can be realized across a host of sectors and industries, but it relies heavily on the prominence of that industry. Conversely, there are few more prominent sectors than electric vehicles, leading us to ponder if electric vehicle manufacturer NIO stock could ever reach $1000.
Companies like Tesla have long dominated the market for their luxurious electric vehicles. Alternatively, automotive stalwarts like Ford have progressed to developing vehicles that offer similar sustainable benefits.
So, let’s delve into the Chinese electric vehicle manufacturer and see if its stock could reach that price.
What is NIO?
NIO Inc. is an electric vehicle developer located in Shanghai, China. Moreover, the company is known for developing and producing a host of electric vehicles in a wide range of styles. The company has marinated a selection of SUVs that remain the most successful of its vehicle offerings.
Along with its development of entire vehicles, NIO has also developed other electric vehicle products for potential consumers. Specifically, the company offers things like chargers, to maintain relevance in the space.
As you could imagine, the company faces prime competition from Telsa. The eclectic car giant, NIO, has often been referred to as the Tesla of China, for its focus specifically on the Chinese market. Subsequently, it was this focus that allowed it to even initiate competition with the Elon Musk-led company.
The company’s focus on the Chinese market is positive for its stock outlook. Indeed, the strained relationship between China and the US has made its focus reasonable. Moreover, it has granted it a consumer base that is more likely to purchase it than a foreign competitor.
Subsequently, the narrow focus on consumers has become a reason why the stock price has continued to increase in recent years. Yet, its expansion throughout Europe with a popular product also provides it with an avenue for growth that could be beneficial, but more on that later.
NIO Advantage
The company, formed in 2014, is primarily known for its battery-swapping technology. Specifically, this development has brought to the market an alternative to the traditional electric vehicle charging station. This presents it with its primary advantage in an upwardly trending stock price.
The first NIO vehicle, the EP9, was launched with the arrival of the company. Moreover, its more than 7,000 employees speak to overall business health that will also work to its advantage. Additionally, it has a rapid growth plan within the electric vehicle market, which could give it a chance to initiate greater competition with other manufacturers.
Additionally, NIO has delivered very impressive sales figures since its inception in 2014. Specifically, its performance in the area of sales is the primary reason why it has earned the reputation that it has since its creation. Moreover, it has catapulted it to be revered alongside Tesla in the electric vehicle manufacturing market.
NIO is also set to launch various battery swap stations throughout Europe and the UK. These systems can charge a car in a matter of minutes, and swap an exhausted battery with a new one. Subsequently, this kind of development will do wonders for its continued price development
Important Factors
Additionally, there are several important factors to understand and consider regarding the breakdown as to whether NIO can reach a stock price of $1000. Firstly, the price of the stock has significantly declined since its high in January. This is a byproduct of interest rate hikes and overall global concerns.
Alternatively, although these negative developments are important to note, they are vital to understanding with some context. Specifically, NIO faced several challenges from the COVID-19 pandemic that devastated China. The manufacturer dealt with chip shortages and a host of other negative developments.
Since then, it has been a very positive upswing. Indeed, the manufacturer appears to be back on track in terms of deliveries, with 29% more vehicles being delivered in the third quarter of the year. Subsequently, it generated revenue of $1.8 billion, which is up 32.6% on the year.
The development of the manufacturer’s sedan, the ET5, is an important part of this. Its popularity has facilitated an increase in deliveries. Moreover, these are still expected to increase from 31,000 in the third quarter, to more than 43,000 in the fourth quarter.
Conversely, there are challenges facing the manufacturer. However, these are macroeconomic challenges that affect almost all companies in the current economic climate. The reality for the manufacturer is that profit margins diminish with every passing quarter, and this trend is showing no signs of reversing.
Specifically, its margin in the second quarter was steady at 13%, with the fourth quarter margin only reaching 3.9%. This is an unavoidable development that will have an undeniable impact on the company’s continued profitability. Subsequently, it will impact the stock price.
The Forecast to $1000
NIO has seen negative income and earnings per share. However, its Price to ASles ratio can predict how the stock will do in five years. Specifically, the revenue figures over the next few years appear to be promising.
Currently, the revenue forecast for 2025 is $28 billion. Moreover, it is predicted to grow at 48%, with a 2030 forecast predicting $193 billion. Thus, forecasted out with the price-to-sales ratio at 2.53, the NIO stock price is expected to reach $112 in 2025, and $772 in 2030, respectively. Thus, NIO could reach the $1000 level between the years 2032 and 2035.
Conclusively, there is no real denying that NIO is rebounding from a tough couple of years. However, there is no overlooking its net loss. The only hope is that its upgrades in execution could mitigate that in the coming years, if holders want NIO stock to reach $1000.
The company took a massive hit from the pandemic and its fallout. Thus, the company should be able to get back on track with those developments in the rearview mirror. Although the stock is expected to endure some short-term volatility, optimistic forecasts could present huge gains in the long term.