Like most of its rivals in 2024, the Chinese electric vehicle (EV) company Nio (NYSE: NIO) has encountered significant hurdles since the beginning of the year.
These challenges, primarily stemming from a lower-than-expected demand, have caused Nio’s stock to fall approximately 40% year-to-date (YTD) at this point in time.
After a 7% decline on Wednesday that appeared to jeopardize recent gains, NIO shares rebounded with a 5.78% rise on Thursday morning, climbing from the previous closing price of $5.02 to $5.30.
What is fueling Nio’s stock increase today?
The surge is largely due to the impending release of Nio’s new Onvo L60 model, which is expected to be a strong competitor to Tesla’s (NASDAQ: TSLA) Model Y.
This new mid-sized vehicle is projected to allow Nio to capture a significant portion of market share from Tesla in China, especially given its relatively low price of approximately $30,000.
Furthermore, the introduction of Nio’s new Firefly brand is anticipated to further enhance its momentum, potentially increasing the appeal of the entire sector with price points estimated between $14,000 and $28,000.
Nio’s Thursday gains may also be influenced by speculation surrounding the company’s potential acquisition of an Audi factory in Belgium. Reports suggest that Nio may submit a bid for the troubled factory as soon as September 23.
While the company has not officially commented on these rumors, recent changes in EU regulations – especially new duties likely to affect Chinese manufacturers – lend some weight to these claims.
The launch of the new vehicle and brand, combined with the possibility of acquiring the Audi factory, could bolster investor confidence in Nio and create favorable conditions should analysts decide to revise their forecasts.
Is now the right time to invest in Nio stock?
Interestingly, despite facing numerous obstacles in 2024, Wall Street analysts have largely retained an optimistic outlook on the Chinese EV manufacturer as of September 19.
Out of the 34 analysts who have shared their opinions over the past three months on the stock analysis platform TradingView, 21 categorize Nio as either a ‘buy’ or a ‘strong buy.’
Additionally, 12 analysts hold a ‘neutral’ view on the stock, with only 1 suggesting a sell rating.
The 12-month price forecast also looks promising despite Nio’s difficulties since the start of the year. On average, analysts predict that the Chinese automaker will experience a rise of 29.78%, reaching $6.51 within the upcoming 52 weeks.
Recent revisions have also tended to be cautiously optimistic. For example, on September 6, JPMorgan (NYSE: JPM) upgraded its recommendation for Nio from ‘neutral’ to ‘overweight’ and established a new price target of $8.
On the same day, Tiger Securities reaffirmed its ‘buy’ rating for Nio stocks, maintaining the associated price target of $8.
On September 5, Bank of America (NYSE: BAC) increased its price estimate from $5 to $5.30, while reiterating a ‘neutral’ stance.
Conversely, Citigroup (NYSE: C) opted to sustain its ‘buy’ rating on September 4 but reduced the 12-month price target from $8.50 to $7.
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