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NIO (NYSE:NIO) is a inventory dealer’s dream. Within the blink of a watch, this electrical automobile (EV) share can whipsaw 10% or extra.
Nonetheless, I’m a long-term investor, so I’m within the firm’s underlying fundamentals. And whereas impressed with NIO’s revolutionary EVs and gross sales development, I’ve at all times been cautious as a result of firm’s ongoing losses.
It appears the market has shared my concern, with the share worth down 86% over the previous 5 years.
But NIO — typically dubbed the ‘Tesla of China’ — simply posted its first ever worthwhile quarter, probably eradicating a key bearish impediment for me. So, with the inventory down 26% since October, ought to I add NIO to my ISA at $5?
A possible turning level
As talked about, NIO simply reported its first ever quarterly internet revenue in This autumn of 2025. Adjusted working revenue was $178.9m, a far cry from the $860m misplaced from operations the yr earlier than. And there was a shock internet revenue of $40.4m for the quarter.
Additionally spectacular was that income jumped 79.5% to $4.95bn, beating expectations, because it delivered 124,807 autos (up 71.7%). This was fuelled by the corporate’s a number of manufacturers — NIO, ONVO, and Firefly — that concentrate on totally different market segments.
For instance, NIO’s Firefly EV is a premium small automobile, which is launching throughout Europe and the UK this yr. In the meantime, the ONVO L90 SUV and large NIO ES8 stay best-sellers of their respective classes.
For the complete yr, income elevated 33.1% to $12.5bn, whereas the automobile margin improved to 14.6%, up from 12.3% in 2024. Encouragingly, the automobile margin hit 18.1% in This autumn, as NIO benefitted from the high-margin premium ES8. R&D bills additionally fell considerably.
Administration is guiding for 80,000 to 83,000 automobile deliveries this quarter, representing a rise of about 90.1% to 97.2%. As volumes improve, NIO may lastly attain the economies of scale wanted to show persistently worthwhile.
Cramer turns bullish
Subsequently, it’s straightforward to see why some buyers are altering their tune on the EV maker. One is CNBC‘s Jim Cramer, the host of Mad Cash. This week, he turned bullish on the inventory for the primary time in years.
Agreeing with a caller on the present, Cramer stated: “I think you’re absolutely right. They did have a good quarter. I’m going to go with you. Five bucks. Let’s do it. It’s a spec. That’s okay. You’re allowed one spec.”
Now, ‘spec’ (speculative) right here signifies that he nonetheless sees NIO as a high-risk, high-reward inventory. And I might agree with this, as a result of one swallow doesn’t make a summer time, because it have been. NIO nonetheless posted a internet lack of $2.1bn final yr.
If inflation from the escalating Iran battle hits the worldwide financial system laborious, NIO’s progress might be derailed. For instance, lithium and chip prices may rise increased, placing strain on margins.
Then once more, these are (hopefully) near-term points. The worldwide EV market is just going to get bigger, creating sturdy development alternatives over the long term for revolutionary carmakers like NIO.
My transfer
Given the unimaginable competitors within the EV market as we speak, when even Tesla is struggling to drive gross sales development, I’m impressed with NIO’s ongoing progress.
Nonetheless, I’m going to maintain the inventory on my watchlist for now to see whether or not the worthwhile quarter was merely a one-off.
