NIO stock is a great long-term play and could challenge its previous all-time high
Electric vehicle stocks have accelerated throughout 2020 and Chinese EV plays such as Nio(NYSE:NIO) stock have enjoyed the most attention.
As the global automotive market shifts towards electrification in the transport sector, the EV industry is only going to grow bigger. As per reports from S&P Global, EV sales in China could reach 1.8 million units this year, which is a 40% rise from the previous year. It could reach 6 million in sales by 2025.
Government support in the form of incentives has been a major driver for the growth of EV sector. EV stocks have been on the rise andNiohas made a strong impact on the industry.
Investor interest in EV companies has surged over the past year. After a strong upside, Nio stock has shown volatility in the past few months. The stock gained 1,900% and hit an all-time high in January at $66. It is currently trading at about $44.
This dip is an ideal opportunity to add the stock to your portfolio. Let us take a look at the investment case for NIO stock.
Nio Offers a Lot More Than Cars
Earlier in the year, Nio introduced the ET7 luxury sedan that will be available in 2022. The sedan has impressive features including an autonomous driving sensor and digital entry system.
The sedan can take the company to another level. Nio is focusing on the largest passenger car market segment and it is working to gain a competitive edge with ET7. The car will come with batteries that can power a vehicle for 1,000 kilometers. This feature will be able to win the market segment that values long-distance performance.
Investors are already piling up on NIO stock for the strong delivery numbers and impressive Q4 results. Although the company is not profitable yet, there is so much going right for it. It is also planning to expand in Europe this year. Interestingly, Nio is not only focusing on reaching new vehicle sales numbers but is also working on its services and software.
Besides the EVs, what sets NIO apart from its competitors is the battery swap program. Through this program, customers can recharge through a faster battery exchange. The company has automatic swap stations that take about three minutes to fully charge the battery. The stations can swap up to 312 batteries in a day.
Nio has more than 170 battery stations and it intends to install more than 500 stations in China by the end of this year. It will strengthen the position of the EV maker in the industry.
Nio vehicle owners get a complete experience with the battery swap service. It already places Nio as a premium brand in the market. With strong delivery numbers and expansion in new geographical markets, Nio is poised for growth.
Wall Street Loves NIO Stock
NIO stock is a favorite with the Wall Street. Recently, Japanese firm Mizuho signaled a buy for NIO stock with a price target of $60. The firm stated that it saw strong upside for the stock as a growth leader in China.
Deutsche Bank analysts reiterated the stock price prediction of $70 after the company reported Q4 earnings.
Additionally, Nio is planning to list shares on the Hong Kong Stock Exchange this year. The company plans to see 5% of the share capital through the listing and this could raise about $5 billion.
Further, out of 10 analysts on Tipranks,seven have a buy rating and three have a hold rating with a consensus price target of $65.24, which is a 46% upside from the current levels.
The Bottom Line
Despite the pandemic and the current downside on the stock, it looks promising for the long run. Investors are mostly keen on the fundamentals and value of the company. With regard to these aspects, Nio is certainly going strong and has impressive long-term prospects.
NIO stock could reach its $60 level in the coming months. If you want to add it to your portfolio for long-term gains, now is the best time to make the move.