NIO Stocks Gear Up For A Great Year With Lots Of Short-Term Catalysts

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Nio (NYSE:NIO) had a great 2021, with record-high shipments. Despite its outstanding performance, NIO shares had an unforgettable year, dropping 45% in the last three months. This has taken the hammer in line with the recent correction in the tech sector. After the important move in the market, NIO shares have taken a much-needed pause and are as attractive as ever.

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The bears quickly pounced on a visible slowdown in the company’s performance. However, the reality is that Nio wants to transform its production facilities to prepare for the massive growth in demand for existing and future cars.

In addition, it seems that Nio is starting to explore opportunities to launch a smartphone product specifically designed for car users. In the not too distant future, we may see devices with technology that complement and enhance the user experience on long journeys. EV makers are hiring mobile professionals, fueling speculation about a new segment.

In related news, Nio will announce its full-year and fourth-quarter performance figures towards the end of March. The company will release more info about its future strategy in the earnings report. This news is worth waiting for, because the company plans to develop new projects and products that will hit share prices.

The EV maker is calling for a strong sales year and expects $9.5 billion this year. Current predictions do not take into account its long-term potential in the underserved sedan segment and its prospects in other markets. As geopolitical tensions ease and we have more clarity on interest rates, NIO shares could rise massively in the coming quarters.

Understanding February Shipping Figures

Nio has reported its latest figures for shipments in February. The number of cars delivered by the company increased by 9.9% year over year. Sales for the first two months increased 23% over the same period last year.

The Covid-19 outbreak and the 2022 Beijing Winter Olympics have led to a drop in spending during China’s prosperous Lunar New Year holiday period, which is always a crucial time for retailers. This business provides transportation and even hotels.

Last year authorities issued various requirements to prevent the spread of the Covid-19 virus, such as requiring repeated tests, approval from company CEOs, and quarantining those returning from high-risk areas.

Therefore, the number of shipments should start to recover and move north once again in the coming months.

Strong Next Year For NIO Stocks

This year, Nio’s entry into the sedan market will be the main narrative for investors. ET7 will be launched in China. The car is a full-size luxury sedan that is likely to be found in various regions. The ET5 is a mid-size sedan and will be on the market a bit later in the year. The car has achieved the highest pre-order volume in the company’s history. The passage of both vehicles will start slowly. This will increase the speed during the second half.

Nio plans to launch a new affordable brand. The EV maker is looking to release a model that could be cheaper and more accessible to the masses in China. Nio products are made with quality in mind and come at a higher price. The premium market is quicker to adopt electric vehicles. The new brand is aimed at lower-end buyers and is meant to compete with more budget-friendly automakers.

And as I mentioned earlier, it’s important to highlight the company’s ambitions in the smartphone space. Cars get greater integration with phones and bring internet connectivity features to buyers.

Risk for Thesis

Nio plans to issue shares on the Hong Kong and Singapore exchanges. Pre-approval for listing on the Hong Kong Stock Exchange has been granted. The company anticipates trading could start as soon as March 10. This opens up investment opportunities for more people, but it is important to consider the company’s ability to meet the demands of this new exchange.

In addition, readers who keep abreast of issues surrounding DiDi Global (NYSE:DIDI) knows how sharp regulatory pressures are for Chinese companies listed on US exchanges. Relations between the US and China are poor, which has affected many Chinese stocks.

Nevertheless, some risks need to be considered with Nio. Perhaps the biggest threat is failing to meet production and delivery goals.

From a macroeconomic point of view, the slowdown in China’s economy and the new variant of Covid-19 are likely to weigh on stocks. In addition, China has reduced subsidies for new EVs by around 30%, affecting demand this year.

Bottom line on NIO Stocks

Due to the broad-based tech sell-off, NIO’s stock has suffered a price drop that is simply not worth it. The company is doing well. It will launch new products and explore other markets soon. Expect another solid year for the company. The opportunity right now to buy stocks is one you can’t miss.

China has always been a lucrative market for car manufacturers, and it is getting more and more profitable. The government supports the EV sector in a big way and has made some serious changes to attract investors to this growing industry. More companies will soon enter China to take advantage of the opportunity. But Nio is well positioned to claim a leading market share.

With impressive growth prospects in China and Europe, NIO shares are a good value game. The future of the electric vehicle industry is very promising. That’s why investors should start buying them now.

As of the date of publication, Faizan Farooque does not hold (either directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publishing Guidelines.

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