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Why Nio Stock Is in High Gear Today

By Neha Chamaria – Updated Dec 23, 2021 at 2:16PM

Key Points

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Nio stock popped after the market took note of an analyst's bullish views.

What happened

After opening Thursday on a soft note, electric vehicle stock Nio (NIO -1.54%) swiftly reversed course and jumped 2.7% by 12:25 p.m. ET after an analyst picked Nio as an attractive stock to buy as we enter the new year.

So what

Deutsche Bank analyst Edison Yu added Nio to the bank's fresh money list as it sees the stock's current price a "great entry point" for 2022, given the recent price drop in Nio's shares. Specifically, Yu believes some of the biggest headwinds for Nio that have impacted investor sentiment can be reversed in the coming year. These include supply constraints, lack of new model launches, and the risk of potential delisting from U.S. stock markets. All of them could potentially be turned around by Nio's three new launches lined up for 2022 and its plans to boost manufacturing capacity to 600,000 units, according to Deutsche Bank.

Nio's latest launch, the ET5 sedan.

Image source: Nio.

At the company's recently held annual NIO Day event, Nio showcased its latest model and made several exciting announcements: 

  • Nio unveiled a mid-size sedan, the ET5, that's set to compete with Tesla's Model 3 in China.
  • Nio has already opened reservations and expects to start delivering ET5s in September 2022.
  • The ET5 is equipped with Nio's advanced autonomous driving system, and virtual reality (VR) and augmented reality (AR) technologies, and it's the company's first model with a glass roof.
  • Nio will lock final orders for its flagship sedan the ET7 on Jan. 20, 2022 and begin deliveries on March 28.
  • Nio plans to enter Denmark, the Netherlands, and Sweden in 2022 after opening dealerships in Norway in 2021, its first international market.
  • By 2025, Nio expects to have entered 25 countries.

Remarkably, the ET5 has already become Nio's most pre-ordered vehicle yet, according to CnEVPost, a website dedicated to covering new energy vehicles.

In a research note sent to investors earlier this week, Yu said the ET5 sedan's competitive price point and sporty design could significantly boost Nio's reach in China. In November, Yu upgraded his rating on Nio to "buy" with a price target of $70 a share.

Now what

I second Yu's views about Nio's growth catalysts going forward, especially in the world's largest EV market where EV sales continue to grow exponentially; sales of new energy vehicles in China surged 122% in November. Nio's November deliveries jumped 105%, and just when investors were getting jittery about rivals in China aggressively expanding with new models, Nio unveiled what could be its best-selling car yet, the ET5. In my view, Nio is one of the best EV stocks you could buy in 2022 and beyond.

Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool owns and recommends NIO Inc. and Tesla. The Motley Fool has a disclosure policy.

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