Sunday, September 25, 2022

NIO stock bounces back again, and J.P. Morgan suggests it may be ‘bottoming out’

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Shares of NIO Inc. NIO, -0.17% bounced into positive territory Thursday, again, to buck weakness in rival China-based electric vehicle makers, after J.P. Morgan analyst Nick YC Lai suggested they may be “bottoming out.” The stock was down as much as 2.8% earlier before reversing to rise 0.7% in morning trading, while XPeng Inc.’s stock XPEV, -3.76% shed 3.2% toward a record low and Li Auto Inc. shares LI, -4.03% slid 3.4%. On Wednesday, after NIO reported a wider-than-expected second-quarter loss and provided a downbeat third-quarter revenue outlook, the stock declined as much as 3.3% intraday before bouncing to close up 2.2%. Lai cut his stock price target to $25 from $30, but reiterated the overweight rating he’s had on NIO since October 2020. He said NIO’s earnings report was a “mixed bag,” as the weaker bottom line and soft guidance came with vehicle gross profit margin that contracted less than feared. “That said, our recent visits to showrooms of all major EV brands (e.g., NIO, XPeng, Li, Aito, Changan) suggest robust demand for NIO’s new models, including the ET5 sedan, ES7 SUV as well as the ET7 sedan — all requiring over 3 months’ wait,” Lai wrote in a note to clients. NIO’s stock has dropped 13.6% over the past three months, while the iShares China Large-Cap ETF FXI, -1.50% has given up 15.8% and the S&P 500 SPX, -0.18% has slipped 2.7%.

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