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Nio (NIO), the Chinese electric vehicle (EV) maker, has once again tightened its belt in Europe, bracing for what looks like turbulent times ahead. Determined to reduce operational costs by 25%, the company has turned inward, cutting down its research and development workforce to stay afloat.
The decision followed a discouraging quarter where European sales took a nosedive. Germany, the Netherlands and Norway each reported double-digit declines. Sweden alone offered a faint silver lining with a modest increase in sales. The recent layoffs mirror earlier job cuts in Nio’s U.S. and Chinese operations.
The financial strain is evident. NIO’s shares have plummeted 17.3% year-to-date, weighed down by intensifying global trade tensions. While President Donald Trump announced a 90-day pause on most reciprocal tariffs, the 25% duty on imported autos and parts still stands.
Making matters worse, he has escalated the pressure on Beijing by hiking tariffs on Chinese goods to a staggering 145%, citing what he called a “lack of respect” from China. In this storm, navigating this penny stock requires a steady hand and a sharp eye.
About Nio Stock
Nio (NIO), rooted in Shanghai, has long held the reputation of being a pioneer in China’s EV arena. It offers electric SUVs with five and six seats, along with advanced smart electric sedans. With a market cap standing at $7.3 billion, it appeals to a price-sensitive audience by offering EVs at competitive rates.
Yet, the market’s verdict has been far less forgiving. Over the past six months, NIO stock has hemorrhaged nearly 40% of its value and now clings to a fragile position. Confidence, it seems, is evaporating.
Valuation metrics offer no comfort either. The stock trades at only 0.76 times sales, a dramatic fall from its five-year average of 6.22x. While on paper this may look like a bargain, the steep drop also reflects mounting skepticism. In a market where perception is half the battle, NIO’s rock-bottom pricing could be seen less as a hidden gem and more as a warning sign.
Nio Misses on Q4 Earnings
On March 21, Nio unveiled its Q4 2024 earnings, missing Street expectations. Revenues climbed 15.2% year-over-year, reaching $2.7 billion, but fell short of analyst expectations pegged at $2.9 billion.
The good news for the EV company is that Nio rolled out 72,689 vehicles in the fourth quarter, a 45.2% year-over-year jump.
Much of this momentum rode on the wheels of Onvo, the company’s new sub-brand targeting the mass market. However, while the showroom buzzed, the income statement told a different story. Losses per ADS widened to $0.47, marking an 8.5% increase from the year-ago figure and landing well below Wall Street’s projected loss of $0.33.
In a bid to fuel its engine, Nio announced the completion of an upsized offering of new shares, raising approximately $520 million. This raised eyebrows, especially since the company had recently insisted it had ample cash reserves.
Also, the first quarter of 2025 saw 42,094 vehicle deliveries, reflecting a 40.1% rise year over year and pushing cumulative deliveries to 713,658 by March-end. Still, profits remain elusive. The company may be adding numbers to its delivery tally, but its bottom line still paints a rather grim picture.
Analysts expect a net loss of $0.13 per share in Q1 2025, though that marks a 63.89% improvement from the prior year’s period. For fiscal 2025, losses are forecast to ease by 27.8%, coming in at $1.09 per share. Looking ahead to fiscal 2026, the picture brightens somewhat, with projected losses narrowing further by 52.3% to $0.52 per share.
What Do Analysts Expect for Nio Stock?
The escalating trade tensions, ongoing shareholder dilution concerns, and the EV manufacturer’s underwhelming Q4 results are exerting pressure on investor confidence.
The atmosphere among analysts paints a picture of cautious realism. The consensus rating stands at “Hold.” Of the 16 analysts tracking the stock, three are backing a “Strong Buy,” two suggest a “Moderate Buy,” nine prefer to stay on the fence with a “Hold,” and two have gone so far as to issue a “Strong Sell.”
Still, the average price target of $4.68 represents potential upside of 30%, while the Street-high target of $8.10 signals a possible surge of 125% from current levels.
