Business & Investment

Is NIO’s stock price ripe for a decline?

The· NIO (NYSE: NIO) Stock prices have become one of the hottest investments we own in the last 12 months. In fact, inventories have increased by about 560% during this period.

Investors seem to me to agree with the company’s growth story. Electric car makers are increasing production. In April, it announced that it had completed the expansion of its monthly production capacity of 10,000 units.

In addition, a few weeks ago, we announced a contract with a Chinese state-owned car maker. Jianghuai Automobile GroupManufactures automobiles and will increase monthly production to about 20,000 units.

Unfortunately, due to a shortage of battery cells and semiconductors, the output is currently limited to 7,500 units per month. Nevertheless, in April NIO announced the production of its 100,000th vehicle.

NIO Stock Price Competitors

Compared to other electric vehicle manufacturers, companies are charging ahead. On top of that, NIO’s stock price seems to be a good investment compared to other sectors.

However, NIO is just one of many businesses competing for market share. but also, Tesla, The company also has to fight competition from things like General Motors.. The latter recently announced that it will increase global spending on electric and self-driving cars by 30% over the next few years. This brings total spending to $ 35 billion.

in the meantime, Ford luxury Lincoln Brand aim Half of total sales are electric vehicles By 2026.

In Europe, towards the end of last year Volkswagen Announced plans to launch 70 all-electric models by 2030. 20 of them are already in production. Management has allocated $ 86 billion to achieve this goal.

These are just a few of the challengers competing for market share in the electric vehicle market. At this stage it is impossible to say which company will succeed.

Risks and rewards

There is space for different car makers on the market. Still, the company needs to gain significant market share to justify the high valuation of NIO’s share price. It’s unclear if this can be done.

The company has several competitive advantages, which should be advantageous. Its battery replacement technology is relatively unique.. It is also backed by the Chinese government, which should help businesses conquer the Chinese market.

Still, compared to things like Tesla and Volkswagen, the $ 78 billion cap is in the early stages of development. Therefore, if competition in the market limits the growth of the company, I think it is highly likely that NIO’s stock price will fall. This seems likely, as competitors are sending so much money to the market.

Therefore, we will not buy stock in the portfolio today. I would like to invest in one of the more established companies in the market, such as Tesla.

Rupert Hargreaves does not have a position in any of the listed shares. Motley Fool UK owns and recommends shares in NIO Inc. and Tesla. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by exploring different insights, Better investors than us.

Is NIO’s stock price ripe for a decline? Is NIO’s stock price ripe for a decline?

Back to top button