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NIO (NYSE:NIO) is one in all my favorite EV producers. It owns some glorious know-how, it has a robust vary of EV in the marketplace and it has Tesla-beating efficiency.
However the inventory tanked yesterday, falling some 9% on the again of stories that China could be reintroducing measures to gradual the unfold of Covid-19.
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I’m already up round 40% on NIO. I used to be fortune sufficient to purchase in early Could when the share value fell to round $13. However, perhaps this latest fall represents one other good likelihood to purchase?
Valuation
NIO is perhaps up 40% since its low in Could, however it’s nonetheless down 55% over the previous 12 months. Like different progress shares, the share value collapsed in direction of the start of the yr as traders moved in direction of worth.
However for me, NIO seems to be good worth in comparison with its friends. The inventory at the moment has a price-to-sales (P/S) ratio of 5.5, which I contemplate good worth given its progress prospects. The metric exhibits an organization’s market capitalisation divided by the corporate’s gross sales for the earlier 12 months.
By comparability, Tesla has a P/S ratio of 12. Rivian‘s P/S is 182, and Lucid is much more costly (365).
Spectacular progress
NIO has demonstrated spectacular progress in recent times. Income has double in every of the final 4 years. In actual fact, in 2021, NIO bought 91,000 vehicles. That’s roughly 10 instances the quantity bought in 2018. Some may name this a Tesla-like progress curve.
2022 may see progress gradual amid Covid-related disruption. However the firm is opening its second manufacturing unit, positioned within the NeoPark in Xinqiao, later this yr. That may undoubtedly improve manufacturing within the coming years.
Market-leading EVs
NIO employs battery-swapping know-how. This permits house owners to swap batteries at NIO stations, which may be finished in only a matter of minutes. It’s a lot faster than standard charging know-how. Nonetheless, house owners may cost their vehicles within the standard manner at dwelling.
By utilizing bigger batteries than its friends, NIO additionally claims that its EV can go additional than Tesla’s vehicles. It doesn’t use the identical testing requirements as Tesla, however NIO says its new ET7 has a spread of 1,000 kilometres.
The Shanghai-based firm can be becoming its EV with some fascinating options. NIO’s EV characteristic a voice-controlled gadget known as Nomi — an Alexa-like machine — which permits drivers to open the window and even take a selfie with out urgent a button.
Dangers
There are all the time dangers and I’m slightly involved about China’s response to this present outbreak of Covid-19. Manufacturing was hit significantly in April when China closed companies in an effort to cease the virus from spreading.
It’s additionally price noting that NIO might wrestle to realize traction within the US given its provenance. That received’t be nice for enterprise.
Shopping for extra at $20
At $20 a share, I’d purchase extra NIO inventory. Sure, there could also be some near-term draw back however in the long term, I imagine this Chinese language EV maker is greatest positioned to problem Tesla’s dominance.
