Picture supply: Sam Robson, The Motley Idiot UK
As a long-term investor, I see endurance as an important attribute for any inventory market investor. However the endurance of buyers in carmaker NIO (NYSE: NIO) has actually been examined lately. NIO inventory has fallen 67% over the previous 5 years.
From hitting a inventory worth of over $60 in 2021, NIO has fallen as little as near $3 over the previous 12 months. Total although, 2025 has to date seen the value revving up.
NIO now trades for 61% greater than initially of the 12 months. However it’s nonetheless a protracted, great distance beneath its 2021 worth. So may it simply be getting began?
Quick-growing enterprise with wind in its sails
It’s not solely NIO’s inventory worth that now appears to be like very totally different to 2021. The enterprise – and its market – have additionally developed quite a bit.
{The marketplace} for electrical automobiles (EVs) has modified as a result of demand has grown however heightened competitors has put strain on revenue margins.
A rising market dimension presents a chance for all automotive makers, together with NIO.
Decrease revenue margins nevertheless, are a threat. NIO’s long-term deal with constructing a premium model can provide it some insulation right here. So can also its launch of modern automobiles, together with a number of massive fashions it introduced over the summer time.
Within the final quarter, NIO delivered over 72,000 automobiles. That represents quantity progress of 329% in comparison with the equal quarter in 2021. With a rising put in person base, wider mannequin vary and elevated demand, I see NIO as having the wind in its sails.
Tons nonetheless to show in terms of profitability
NIO has just lately taken benefit of that – and its booming inventory worth – to spice up liquidity by promoting extra shares. That helps it purchase time, because it continues to burn money.
Whereas quite a bit has modified for the corporate since 2021, one factor that has not is its constant lack of ability to show a revenue.
Actually, its internet loss in the latest quarter was dramatically greater than the equal determine for 2021.
Watching with out investing… but
That considerations me as a possible investor. The startup prices of ramping up manufacturing could make automotive manufacturing an unattractive proposition. However the perfect is that, as gross sales volumes develop, losses cut back on account of economies of scale – and finally an organization can flip a revenue. That’s what occurred at Tesla, for instance.
What about the long run? I feel NIO may soar even from right here – or fall a great distance. What occurs, in my opinion, will probably finally rely on whether or not NIO can flip the nook in terms of profitability.
Buyers stay affected person. If NIO can turn out to be persistently worthwhile, I feel its share worth may doubtlessly find yourself far above right this moment’s degree.
For now although, I see the continued lack of profitability as a threat. So I can’t be shopping for NIO inventory with out proof that the corporate’s enterprise mannequin will be worthwhile on a sustained foundation.
