Why Nio Stock Continued to Soar Today


Shares of Chinese electric vehicle (EV) maker Nio (NYSE: NIO) have been flying recently. Nio’s American depositary shares were up by 11.1% as of 3:50 p.m. ET today. That brings its five-day surge to a whopping 38%.

That move was initiated by Nio’s promising second-quarter earnings report last week. And the positive momentum continued today after the company caught an upgrade from one Wall Street analyst and a very bullish label from another.

Nio’s “upside catalyst watch”

When Nio reported its second-quarter results at the end of last week, it showed strong improvement in its gross profit margin compared to the first quarter, and beat analyst expectations with its third-quarter delivery and revenue guidance.

After shipping a record 57,373 EVs in the quarterly period, the company said it expects to deliver between 61,000 and 63,000 EVs in the third quarter. That led J.P. Morgan analyst Nick Lai to upgrade Nio shares and significantly raise his firm’s price target.

Lai now thinks investors should buy Nio stock and sees the stock reaching $8 per share. That’s up from his previous target of $5.30 per share and would represent a gain of nearly 50% from recent levels. His reasoning is that operating cash flow will turn positive for the remainder of 2024, which should eliminate the need for Nio to raise fresh capital. Nio ended the second quarter with about $5.7 billion on its balance sheet.

At the same time, Citigroup analyst Jeff Chung opened a 30-day “upside catalyst watch” on the stock. That designation means he thinks Nio shares are on the verge of moving higher. He also cited the rising gross profit margin as a key reason, reports Barron’s.

Whether it was the encouraging quarterly report or the backing of Wall Street analysts, investors have been jumping into Nio shares. The stock’s move higher can continue if the company keeps showing real progress toward achieving profitability.

Should you invest $1,000 in Nio right now?

Before you buy stock in Nio, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nio wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $630,099!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of September 9, 2024

Citigroup is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Howard Smith has positions in Nio. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

Why Nio Stock Continued to Soar Today was originally published by The Motley Fool



Source link