One such stock is NIO (NASDAQ: NIO), an innovative company that has the potential to 5x your money by 2030.
NIO Is No Ordinary EV Manufacturer
Tesla is not the only player in the electric vehicle (EV) manufacturer market, and while there is plenty of competition building, NIO is catching the attention of investors. Founded in 2014, NIO is a pioneer and leader in the EV market.
NIO management claims that it’s “much more than a car company….NIO designs, develops, jointly manufactures, and sells premium smart electric vehicles, driving innovations in next-generation technologies in autonomous driving, digital technologies, electric powertrains, and batteries.”
This Chinese-based EV manufacturer has been hit hard recently because of lockdowns and semiconductor chip shortages. However, long term, this company has demonstrated it has the catalysts needed to drive impressive results.
Innovation Is Impressive
The electric vehicle market is still new for many, but that doesn’t mean companies aren’t already innovating, and NIO is no exception.
Whether it be NIO’s smart electric all-wheel drive SUV or the development of one of the world’s fastest cars, the current lineup of new models is impressive. With the top battery option, the company’s ET7 and ET5 sedans can travel up to 621 miles before charging, acting as direct competitors to Tesla’s Model S and Model 3. Since China is the world’s leading auto market, NIO has an advantage in market share.
NIO is also driving innovation through its technology and services. One example is its battery-as-a-service (BaaS) subscription. This unique service allows EV consumers to charge, swap, or upgrade their batteries. Those who subscribe receive a discount when purchasing a NIO EV. The goal here is to lock in revenue from long-term subscribers.
A Closer Look at NIO’s Revenue Growth
NIO is currently on track to quadruple its sales by 2024.
Examining the company’s numbers over the past few years, revenue growth has been strong despite recent supply chain issues — which are expected to be resolved by 2023.
- In 2019, revenue grew 58%.
- In 2020, revenue grew 107.8%.
- In 2021, revenue grew 122.3%.
When looking at vehicle deliveries, NIO reported 25,034 in the fourth quarter of 2021. This figure represented an increase of 44.3% from the fourth quarter of 2020 and 2.4% from the third quarter of 2021. The company delivered 91,429 vehicles for the full year, up 109.1% from 2020.
Other Reasons to Consider Buying NIO Stock
Analysts forecast continued growth year-over-year as the huge addressable market expands. The auto industry is on the cusp of significant change, and NIO is in a good position when the scales tip.
Revenues are expected to mushroom higher:
- 2022: $9.4 billion
- 2023: $15.4 billion
- 2024: $20.5 billion
- 2025: $28.7 billion
By 2025, it’s projected that EVs will represent a third of China’s roughly 25 million annual car sales, and China is anticipated to support the growth of NIO. However, the company is also expanding into the international market, venturing into Europe this year.
Norway was the first of many to offer NIO’s complete charging infrastructure. Germany, the Netherlands, Sweden, and Denmark are next on the list. By 2025, NIO plans to be in 25+ countries and regions worldwide.
New model launches will continue to act as a catalyst for NIO, driving sales growth and customer loyalty.
Regulatory Concerns Are Elevated
Investors should be aware of a few potential concerns surrounding NIO.
The first is the regulatory uncertainty surrounding Chinese stocks. The Chinese government has cracked down on fintech, gaming, education, and internet companies. The U.S. Securities and Exchange Commission also finalized a new rule that would result in the delisting of Chinese stocks that do not comply with new audit requirements, which has some NIO investors concerned.
While NIO’s numbers are strong, the company is not yet profitable, and rising interest rates will not help. NIO is still in its early stages. However, at some point, the company will need to show investors that it is a profitable, viable business.
Is It Time to Buy NIO?
A discounted cash flow forecast analysis reveals that fair market value for Nio is $16.32 suggesting north of 26% upside at the time of research. Is that a sufficient margin of safety to buy now? It’s pretty good for investors with moderate risk. More conservative investors may wish to sit tight in the hopes of better prices.