NIO vehicle driving on a road
Source: NIO Facebook

NIO's Stock Forecast Amid Solid July Deliveries and Upcoming Earnings

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Aug. 2 2021, Published 10:21 a.m. ET

NIO stock gained 4.8 percent on July 30 despite the negative sentiment around Chinese names as Beijing cracks down on its firms, particularly tech-related names. NIO released its July 2021 deliveries on Aug. 2, which implied more than double the sales for the month YoY. Since the company is scheduled to announce its results for the second quarter of 2021 in August and given its impressive July deliveries, investors want to know what to expect from NIO’s stock forecast in August.

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On a YTD basis, NIO stock has declined by more than 8 percent since the broader market sell-off caught up with it. However, the stock has been in an upward trend lately given company-specific positive factors.

How China's tech crackdown impacts NIO

Many U.S.-listed Chinese names have been hit due to China’s broader crackdown, which has been particularly severe for tech firms. NIO and other Chinese EV names have also seen some decline due to the overall negative sentiment around Chinese names. The EV names from China aren't expected to see much of a crackdown or downtrend.

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nio norway
Source: NIO Facebook

The risk of China targeting EV companies is low. China sees the EV industry as a key strategic industry under its “Make in China 2025” plans. Some of these companies have direct or indirect government support, which makes NIO look attractive.

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NIO's July delivery report

NIO delivered 7,931 vehicles in July 2021—a growth of 124.5 percent YoY. NIO’s Chinese peers, Xpeng and Li Auto also posted very strong deliveries in July. Xpeng’s deliveries of 8,040 in July marked a record month and a growth of 228 percent YoY. Meanwhile, Li Auto’s 8,589 deliveries implied growth of 251.3 percent YoY. The robust deliveries also show how strong the EV demand in China has been.

NIO has been posting very strong deliveries for the past several months despite the chip shortage worldwide. Recently, companies have mentioned that the chip shortage is abating somewhat. Along with a strong demand environment, this is a positive development for EV-makers.

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NIO's Q2 earnings

NIO is scheduled to report its earnings for the second quarter of 2021 on Aug. 11 after the U.S. markets close. The company will host an earnings conference call at 9:00 p.m. ET on Aug. 11. Analysts expect the company to post an EPS of -$0.11 and revenues of $1.28 billion in the second quarter. In the first quarter of 2021, NIO posted an EPS of -$0.04, which was better than analysts’ expectations of -$0.16. Its revenues of $1.22 billion were also better than the market expectations of $1.02 billion. In the second quarter, the company has guided for revenues of $1.243 billion–$1.298 billion.

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NIO stock forecast

Wall Street is optimistic about NIO stock. The consensus sees its price climbing by nearly 29 percent in one year and reaching $57.6. Among the 17 ratings, 12 analysts have a buy rating and five have a hold rating for the stock.

Recently, NIO stock has been upgraded and many analysts raised its target price. On July 9, HSBC upgraded NIO from hold to buy and increased its target price to $69 from $54. On June 8, BOCOM International initiated coverage on NIO stock with a buy rating and a target price of $57.

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What NIO investors should watch in August

One of the most important catalysts investors should watch out for in NIO stock in August will be its results for the second quarter of 2021. Investors will watch for management's commentary regarding future guidance. A steady path towards profitability will be another important aspect that investors will be attuned to during the company's second-quarter results.

Will NIO stock go up or fall more?

NIO stock has experienced a negative sentiment lately due to China’s tech crackdown. However, NIO isn't expected to be impacted much by the crackdown. There are many other positive catalysts that should propel the stock higher. The company is expanding its production capacity and at the same time, it's venturing into foreign markets starting with Norway. In September, NIO is expected to start deliveries to Norway. NIO’s second-quarter results could also be a positive catalyst that could help its stock in August.

NIO's recent battery day confirmed its expansion plans in the space and the company’s conviction towards its battery as a differentiating factor. The company's long-term fundamentals remain in place, including its unique proposition of BaaS (battery-as-a-service), international expansion, improving margins, and a positive operating cash flow. Therefore, NIO stock is destined to go up.

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