Reasons for dismal performance in

 

Nio Stock Forecast 2023: Nio’s share price tumbled due to these factors. A couple of them is likely to continue in 2023.

Nio Inc 12 Month Forecast

Source Overall Analysts’ Consensus 12 Month Nio Stock Forecast
Upper Range Lower Range
CNN Money Buy $66.79 $18.75
Nasdaq.com Buy $39 $27.5
Investment.com Buy $45 $24.5

Journey of Nio Inc in 2022

Tesla Inc Performance Chart

Stock Name 1 day 5 days 1 Month 6 Month YTD 1 Year
Tesla Inc -8.91% -9.80% -46.70% -43.94% -66.72% -72.17%

Reasons for dismal performance in 2022- The year 2022 has not been a great year for Nio Inc. It fell more than 63.52% in 2022 (as of 19.10.2022). It has underperformed S&P 500, which is down by only 22.44 %. The sell-off is driven by multiple factors, which are likely to continue for the first half of 2023.

With rising bond yields and a looming recession in the US and around the globe, investors are shying away from riskier growth stocks. Add to it, not so good Q2 results of Nio Inc, wherein it reported a loss of RMB 2.76 billion. Gross margins also took a hit to 16.7% from 20.3% in the year-ago quarter. A major reason for falling gross margins is supply chain issues, which have considerably increased the company’s cost.

China has also faced severe lockdowns due to the resurgence of Covid in the country which has added fuel to supply chain issues and cut the production targets of companies like Nio Inc. The US is facing a high inflation environment and FED is continuously increasing interest rates.

Nio’s share price tumbled due to these factors. A couple of them is likely to continue in 2023. For example, supply chain issues are still present although Nio is taking steps to overcome them. Fed will still keep the rates high in 2023 first half. All these factors pose a difficult environment for Nio to start 2023.

Factors that will Affect Nio Share Price in 2023

Deal with Australian lithium producer Greenwing Resources- Nio Inc recently invested in the Australian-based lithium company. EV maker will own 12.16% of the stake in Greenwing and as it is more than 10%, it also enjoys the right to be nominated in the company’s board of directors. The proceeds from the purchase will be used in the exploration project of Greenwing in San Jorge.

The purchase by Nio is a step towards securing battery raw material supply lithium in the long run. In the long run, Nio plans to develop in-house batteries and also to strengthen the battery swap network. Battery swap technology is Nio’s Battery as a Service (BaaS) strategy, in which the battery can be replaced in about three minutes. Also, a vehicle can be purchased without a battery, which reduces the cost of the vehicle significantly. It has given an edge to Nio over its peers.

A single deal with not solve all the supply chain problems, but it is a step in the right direction and Nio can take advantage of this deal in 2023 in a major way.

Nio Berlin 2022- Another positive factor for Nio Inc entering into 2023 is the expanding global presence of Nio in other countries. Recently, on October 7th, 2022, Nio Inc hosted Nio Berlin 2022. It is the European version of Nio day. The company unveiled ET5, ET7, and EL7 (renamed version of ES7 from China because of a branding dispute with Volkswagen’s Audi) models at the event.

The interesting thing is that the Chinese maker plans to only lease a car in four countries in Europe, i.e., Germany, the Netherlands, Sweden, and Denmark. Nio Inc plans to work on a subscription model wherein a 75-gigawatt-hour battery can be leased for 1199-1295 euros a month. It is an unconventional move by the company to capture the European market so that people can get a feel of Nio cars at a smaller amount if they hesitate to invest big in new company cars.

This move will either make or break Nio’s future in Europe and hence will impact Nio’s share price in a major way in 2023.

Geopolitical Tensions between US and China- Nio Inc is indeed expanding its global presence in countries like Norway, and Germany, but it is still a China-based country and of late, tension is mounting between US and China for geopolitical reasons. The US is putting sanctions on Chinese companies to stop imports. Also, talks are going on to delist the Chinese companies’ ADR from the US stock market. That would be disastrous for Nio shares.

The US government has also put sanctions on local companies to stop the chip trades from companies in China and Taiwan. This will further aggravate the supply chain problems for Nio and can take a hit on Nio’s share price in 2023.

Support from the Chinese Government- One prominent reason for the downfall of Nio Inc and other technology companies in 2022 is the absence of support from the local government. Of late, the Chinese government became stricter in its oversight of technology and has wiped out $1 trillion for Chinese tech companies, according to a report from Bloomberg.

But recently on October 7th 2022, China President Xi Jinping made an optimistic speech for the tech sector and laid out plans for the next five years for China. He pointed out the need to focus on developing the core technologies indigenously. Investors assumed that it is a signal to focus more on core technologies including electric vehicles. It is a shift in tone towards the tech sector which will be fruitful for companies like Nio Inc going into 2023.

Is Nio a Buy for 2023

Nio shares were a super performer in 2020 and early 2021. The share price rose from a little above $3 to more than $60 in less than a year and it was seen as a possible competitor of Tesla. Two years down the line, the share price has crashed back to lows of $11. Investors are still in a risk-averse mode and are avoiding stocks with very high valuations.

The biggest disadvantage with Nio right now is that it is still an unprofitable company and it is not expected to be one in the least next two years. Although profit margins have improved over time, it is still reporting sizable losses in every quarter result.

Although Nio is in a much better position compared to Lucid and Rivian in terms of production and delivery targets, former companies still struggling to scale up production. But I am still skeptical about Nio Inc as an investment in 2023 simply because of geopolitical tensions between USA and China which could escalate anytime in the coming year.

IMUX Stock Forecast: IMUX soared by 20%, but does this continue further?

Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.

[ad_2]

Source link