It may be hard for investors to get excited about a company that lost nearly $1.5 billion in operating income in the first half of this year. In fact, the Chinese electric carmaker announced New (NYSE:NIO) He made no profit at all.
That helps explain why the stock has lost more than 80% of its value over the past three years. But there was also some important and positive news in NIO’s second-quarter report. That trading momentum has been reflected in the stock price, with NIO’s American Depositary Shares up more than 40% in the past month.
the Market value of the company It is now worth about $11 billion, and electrical value The smartphone maker ended the quarter with $5.7 billion in cash and equivalents, making now a good time to take a look at Nio’s next big move and whether it’s a stock to have in your portfolio.
Step towards profit
One of NIO’s most notable achievements in the second quarter was a significant boost in its vehicle margin. Vehicle margin, which is based on revenue and cost of sales of new vehicles, was 12.2% in the quarter, compared to just 6.2% in the year-ago period. That was helped by revenue that nearly doubled year-over-year.
After years of stumbling and falling behind, NIO appears to be finally starting to see its breakthrough in vehicle production and sales growth. This comes amid increasing global competition in the electric vehicle sector. NIO sold more than 20,000 electric vehicles for four consecutive months for the first time. This has helped it gain market share and boost margins.
The company just set a new quarterly record with more than 57,000 units shipped. It also gave guidance for third-quarter vehicle deliveries in the range of 61,000 to 63,000 EVs. Nio CEO William Li noted that the company’s second-quarter sales volume led it to secure more than 40% market share in China for EVs priced above the equivalent of about $42,000. Nio has plans to continue expanding. Its focus on the luxury end of the market has helped it compete with China’s leading EV maker BYDwhich claims to have the lion’s share of China’s low-priced electric vehicle market.
Treating range anxiety
NIO has been a pioneer in China and elsewhere in expanding battery charging and its unique battery swapping technology. NIO’s battery swapping stations give EV buyers the option to lower their initial vehicle cost by paying a monthly subscription for a battery-as-a-service (BaaS) plan. Drivers can use its battery swapping stations to swap out depleted batteries for freshly charged ones, a process that takes just minutes.
Last month, NIO announced a new plan to boost charging and battery swapping networks across China. Its “provincial power supply” plan will accelerate the construction of these networks.
As of August 31, NIO has more than 2,500 battery swapping stations globally, with more than 800 stations strategically located on highways in China. With more than 577,000 NIO vehicles on the road, the company has swapped batteries more than 50 million times. Its new plan will see power swapping stations available in thousands of Chinese provinces by the end of next year. It also plans to build a new factory to build up to 1,000 power swapping stations annually.
mass market brand
Nio’s new Onvo brand will also benefit from the expanding charging and sharing networks. Onvo is Nio’s new EV brand that aims to tap into a more mass market and take over TeslaOnvo Model Y. The Onvo L60 midsize SUV starts at around $30,000.
This brand, combined with NIO’s existing and growing charging technology and infrastructure, could be the next driver for NIO’s business and stock. Investors willing to be aggressive can add NIO stock now, anticipating its next phase of growth with Onvo. Otherwise, watch for signs that Onvo is gaining momentum to become somewhat more conservative and still be able to get ahead of NIO’s next big move.
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Howard Smith He holds positions in BYD Company, Nio, and Tesla. The Motley Fool holds positions in and recommends BYD Company and Tesla. The Motley Fool holds positions in Disclosure Policy.
Prediction: This will be the next big move for Nio Originally posted by The Motley Fool
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