Business & Investment

The stock prices of Tesla and NIO plummeted. Need to buy these stocks now?

Inventories of electric vehicles (EVs) started high in 2021 but have been declining since then. At the very end, Tesla (NASDAQ: TSLA) Stock prices have fallen almost 22% from their January highs, NIO (NYSE: NIO) Stock prices fell 37%.

What is the crash of EV stock price?

From my point of view, there are two ways to see this trend.

First, EV stock prices showed an unsustainable rise until January. In a year, Tesla’s share price rose 569% and NIO rose 1,491%. And this is despite the recent price cuts.

Second, the scorching growth of EV stock prices was expected. There is policy promotion for cleaner vehicles. EVs are also more price-competitive than before.according to Direct phone, One of the UK’s largest car insurance companies, EV lifetime cost Today, it’s actually slightly less than a petrol car. This means that EV stock prices can rise further over time. Therefore, the latest price drops can be seen as an opportunity to buy when these promising stocks are still falling.

Valuable bubble

I have something to say about both discussions.

There is no doubt that the rise in EV stock prices has been spectacular over the past year. And this is despite the fact that all such stocks are in the red except Tesla. Tesla also turned profitable for the first time last year.

To me, this looked like a bubble at the time. And now it is. For example, Tesla’s price-earnings ratio (P / E) is 1,064 times. Financial Times data.

At the same time, it cannot be ignored that there is great potential in the EV industry. This means that at least some EV companies will be successful in the long run.

What’s next for Tesla and NIO?

And that’s where Tesla and NIO come in.

Tesla, the most synonymous with EV, has grown significantly in recent years. Since 2016, its revenue has grown at a compound annual growth rate (CAGR) of over 45%. Tesla is ready to grow further due to the benefits of its early movers, the immense popularity of its founder Elon Musk, and the growing demand for EVs.

NIO in China has also had some success. Revenues doubled last year while net losses were halved. China is the world’s largest car market, and Deloitte reports that by 2030, half of cars will be EVs.

If trade stress between the US and China continues, Tesla’s dominance in China’s EV market could diminish. This is the space that NIO can fill.

Takeaway of Tesla and NIO shares

However, for now, I think both stock prices are still soaring. And the EV industry is too early to justify my purchase of them.I think there is Other ways to invest We have a stock of clean energy as well as Tesla and NIO.

Manika Premusin There are no positions 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 examining different insights, Better investors than us.

The stock prices of Tesla and NIO plummeted. Need to buy these stocks now? The stock prices of Tesla and NIO plummeted. Need to buy these stocks now?

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