uploads///kaleb tapp JwWPnBE unsplash

Goldman Sachs Downgrades NIO Stock, Sell-Off Ensues


Aug. 14 2020, Updated 2:01 p.m. ET

Goldman Sachs analyst Fei Fang downgraded NIO stock from neutral to sell on July 17. As reported by The Fly, Fang thinks that the stock price reflects “over-optimism.” He said that the stock’s 89 percent rally in the past month does not accompany any substantial changes to volume or profit expectations.

Article continues below advertisement

However, Fang is still positive about long-term investments in NIO given “China’s structural auto premiumization and EV adoption, as well as the ‘scarcity of being China’s first home-grown high-end passenger vehicle brand,’” according to The Fly.

Goldman Sachs’s previous ratings for NIO

On June 2, Goldman Sachs upgraded NIO from neutral to buy. Then, 22 days later, the analyst downgraded the stock from buy to neutral based on its valuation. He downgraded NIO again 25 days later.

NIO stock skyrocketed by 89 percent due to record deliveries for June, which assured investors of the company’s consistently strong operational performance. After the strong sales report, momentum trading also buoyed the stock to historic highs.

Article continues below advertisement

Goldman Sachs’s downgrade dragged down NIO

Due to Goldman Sachs's downgrade on July 17, NIO stock gave up 14 percent of its gains. Although the sell-off was overdone, some of it was overdue. Due to momentum trading, the stock got ahead of itself in the short term. Long-term investors should accumulate NIO stock on pullbacks. However, in the medium to long term, there are several catalysts that could propel the stock much higher.

Outlook for NIO stock

Wall Street analysts’ recommendations and ratings usually NIO’s stock price rather than predicting it. However, ratings from well-known investment banks such as Goldman Sachs can move the stock price significantly.

There might be a hangover from the downgrade for a few more sessions. Then, the stock should start its ascent as positive catalysts materialize. The more gradual this ascent is, the better.


More From Market Realist

  • what credit cards can you get without a credit check
    New Program Aims to GEt Credit Cards to People Without Credit Scores
  • Man going into a tax preparation office
    Should I File a Tax Extension Before the Tax Deadline?
  • Thai Airways plane
    Thai Airways (TAWNF) Is Risky, Best to Avoid the Penny Stock
  • A "now hiring" sign outside a Popeyes restaurant, one sign that employers are having trouble finding employees willing to work for current wages.
    Why Employers Are Struggling To Fill Jobs Despite High Unemployment
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.