According to 1 Wall Street Analyst, Nio Stock is No Longer a Sell - Latest Global News

According to 1 Wall Street Analyst, Nio Stock is No Longer a Sell

Good news for Nio (NYSE:NIO) Shareholders! Investment bank for three long months JP Morgan said the Chinese electric vehicle (EV) maker’s stock is a sell.

But not anymore.

On Wednesday, the bank’s investment firm relented and removed Nio’s Sell rating, upgraded EV stock to Neutral and set its price target at $5.40 per share. This price implies an upside of just 2% from the current $5.32.

Is Nio stock a buy?

Remember, JPMorgan isn’t saying Nio stock is a buy here. And that shouldn’t be the case, because Nio isn’t.

Valued at $12 billion, Nio lost nearly 25% of its own market cap last year. Additionally, the company is burning through its $2.1 billion in net cash at a rate of $2.2 billion per year. And analysts questioned S&P Global Market Intelligence forecasts the company will burn $2.3 billion in cash this year as the price war among electric car makers rages on in China, even as consumer enthusiasm for electric vehicles wanes.

So all is not well with Nio.

However, JP Morgan notes that the Chinese government is promoting new “stimulus measures” designed to boost demand for electric vehicles and that this will provide a tailwind for Nio’s business. At the same time, the company is enjoying some success with its Battery as a Service business model, reducing prices by 25% and more than doubling the number of subscribers to the service. Whether this will be enough to make Nio profitable remains to be seen. But it should at least boost sales if more car buyers choose Nio electric vehicles to participate in the program. That alone could attract buyers to the stock and make it riskier to short sell.

Since Nio is not expected to become profitable until 2027 and is likely to become net cash negative in 2025, owning the stock seems even riskier. I will not buy Nio shares. Still, JP Morgan is probably right: Over the past year, shares have fallen 28% and have underperformed S&P 500 By more than 50 points, most of the short-term gains from shorting Nio stock have likely already been made.

Should you invest $1,000 in Nio now?

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Rich Smith has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends JPMorgan Chase, Nio, and S&P Global. The Motley Fool has a disclosure policy.

Nio stock is no longer a sell, according to 1 Wall Street analyst originally reported by The Motley Fool

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