Nio: A Spot of Luck for the Discerning Investor

Now, Nio (NIO 3.29%), a purveyor of electric vehicles from the Middle Kingdom, currently finds itself trading at a price that’s rather below its initial offering back in 2018 – a most curious state of affairs, what! One might almost think the market had overlooked a rather smashing opportunity. Yet, from those humble beginnings to the present day, its net sales have more than quadrupled – a positively dazzling performance, wouldn’t you say? – and still, the valuation remains, shall we say, reasonable, at less than one times its projected sales for 2025.

The reason for this somewhat subdued enthusiasm, you see, is a bit of a muddle. There are headwinds, you understand – competitive pressures and a spot of bother with international relations. The trade tensions between the U.S. and China are adding a wrinkle or two, but I daresay a fellow with a keen eye can spot a bargain even through a fog. I firmly believe Nio could deliver a tenfold return within the next few years, a most agreeable prospect for the discerning investor.

Why the Stock Remains a Bit Under the Weather

Nio, you see, deals in rather splendid electric sedans and SUVs, aimed at those with a taste for the finer things. More recently, they’ve introduced the Onvo and Firefly brands, offering slightly more modest vehicles – a dash of practicality, you might say. But the real stroke of genius, the thing that separates Nio from the common herd, is its swappable batteries. A positively brilliant idea! Instead of waiting for hours while the vehicle charges, one simply swaps the depleted battery for a fresh one at one of their stations. They now boast over 3,500 of these establishments across China and Europe, a considerable improvement over the 777 they had back in 2021. They do, of course, also work with conventional charging, for those who prefer the old-fashioned way.

Deliveries doubled in 2020 and 2021, a truly impressive feat. However, 2022 and 2023 saw a slight cooling – a mere 34% and 31% growth, respectively. This slowdown, attributed to the aforementioned macro and competitive challenges, rather dented the vehicle margin, dropping from a peak of 20.1% in 2021 to 9.5% in 2023. The pessimists, naturally, began muttering about unsustainable business models, but I say, a little turbulence never hurt anyone!

Why a Turnaround Seems Rather Likely

Even amidst these minor setbacks, Nio managed a rather sprightly 39% increase in deliveries during 2024, fuelled by strong sales of its ET-series sedans and Onvo SUVs in China, and a bit of expansion across Europe. The vehicle margin also perked up to 12.3%, thanks to a growing market share and a bit of pricing power. A most encouraging sign, wouldn’t you agree?

And the good news continues! In the first nine months of 2025, deliveries have increased by another 35%. The vehicle margins have continued to expand, and they’re expecting to report their first adjusted profit in the fourth quarter, when they release their full-year earnings on March 10th. A positively ripping success, what!

Analysts are forecasting that Nio’s revenue will more than double between 2024 and 2027, with adjusted EBITDA turning positive in the final year. If that comes to pass, and Nio is valued at a generous 5x forward sales, the stock could rise by more than 8x by the beginning of 2027. Therefore, Nio could easily be a ten-bagger if the macro environment stabilizes and investors rediscover their fondness for Chinese stocks. A most agreeable outcome, wouldn’t you say? A spot of luck for the discerning investor, and a thoroughly good show all around.

2026-03-02 19:52

Why the Stock Remains a Bit Under the Weather

Why a Turnaround Seems Rather Likely

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