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Thesis Summary
NIO Inc. (NYSE:NIO) has seen increased volatility in the face of all the macroeconomic uncertainty the market faces. In this article, I cover the latest monthly deliveries for NIO, and also more catalysts that could catapult NIO’s stock price in the next year.
Overview
NIO recently reported its latest figures for deliveries for February. The company delivered 6,131 vehicles. This is a 9.9% monthly increase and a 23% YoY increase. On the surface, the numbers look weak, but we have to consider that February is the shortest month, and it follows the Chinese New Year.
In other news, NIO will be announcing its full-year and fourth-quarter results on March 24th. This should give us some deeper insight into the yearly performance and the upcoming developments.
With that said, there is still a lot to get excited about before earnings. I have already mentioned in previous articles, numerous catalysts like the Norway launch and the upcoming ET7 launch. In the last two weeks though, I have found 3 more reasons to be bullish on this stock.
3 More Reasons to Buy NIO
NIO has recently announced that it will be looking to list its shares in Hong Kong and Singapore. The company has obtained preliminary approval from the Hong Kong Stock Exchange and believes shares could be available for trade by March 10th. Meanwhile, the Singapore application is being reviewed.
For the most part, multiple listings are considered good for stocks. This will make NIO available to a whole new set of investors. With that said, the new listings indeed show the fact that NIO could be concerned about its ability to continue trading in the US.
In other even more bullish news, NIO is launching a sub-brand with a planned annual capacity of 60,000 units. NIO’s idea here is to create a lower-priced model that can tackle the mass market in China. The relationship between NIO and the sub-brand could be compared to that between Lexus and Toyota or Audi and Volkswagen.
NIO’s products are made for the premium market and priced accordingly. This was a smart approach since the higher-end market has been faster to adopt EVs. But now, with the release of the new sub-brand, NIO is ready to tackle the lower end of the market and compete head to head with some of the lower end auto producers.
Lastly, there is also speculation that NIO will be launching a smartphone business to complement its auto offerings. According to a recent report, NIO is in the early stages of developing smartphones specifically designed to interact with cars. NIO is allegedly hiring experts in phone-related jobs, but there is not much more we know at the moment.
In any case, though, this could be a very interesting growth avenue for NIO. Interestingly, I have pointed out the similarities between NIO to Apple, Inc. (NASDAQ:AAPL) in previous posts. Furthermore, I have talked about how the EV revolution can be seen as an extension of the upgrade we saw when we went from “regular” phones to smartphones. Cars today are computers on wheels, and they should be thought of as such. Making them compatible and easy to interact with other devices will be a key feature moving forward.
Most notably though, I think I would be particularly successful in launching its smartphone. Like Apple, NIO has managed to portray an image of exclusivity and created a devoted following. NIO doesn’t only make cars, it partners with brands, has an App, and provides the NIO House, which acts as both a charging station and an exclusive clubhouse. Therefore, I think NIO could be quite successful in launching its phone. Perhaps these rumors will be addressed in the next earnings call.
Risks
Although there is a lot to like about NIO, the recent geopolitical situation also puts NIO and other companies at risk. China is a well-known ally of Russia, and the tensions between Russia and the US, will further tensions with China too. We have already seen Chinese stocks, even mega-caps like Alibaba Group Holdings (NYSE:BABA) suffer from these tensions.
NIO and other EV producers are not immune to regulations and restrictions. As we begin to think of EVs as computers, it will also raise the question of data accumulation and data protection. Cars will be a new source of data for companies, and foreign countries might not look fondly at Chinese companies that can gather a lot of data.
Takeaway
All in all, NIO continues to look like an attractive investment, with many upcoming catalysts. We will probably see some movement leading up to and after its earnings release at the end of the month, so this might be a good moment to add or jump in.
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