What’s going on with the NIO share price?

first_imgSimply click below to discover how you can take advantage of this. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. What’s going on with the NIO share price? I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Image source: Getty Images Enter Your Email Address The NIO (NYSE:NIO) share price had a fairly volatile journey last week. Despite it falling nearly 10% by Thursday, the US stock recovered almost all of this decline on Friday. But what’s causing this rollercoaster-like behaviour? And does this electric vehicle manufacturing company belong in my portfolio? Zaven Boyrazian | Monday, 17th May, 2021 | More on: NIO “This Stock Could Be Like Buying Amazon in 1997” Our 6 ‘Best Buys Now’ Shares The fluctuating NIO share priceRecently, there has been a mixed bag of news surrounding NIO, which appears to be causing the volatility in its share price. Vehicle deliveries for the 2021 first quarter did increase by around 420% year-on-year. However, the management team has stated that the ongoing semiconductor shortage is impeding its ability to ramp up production volumes. As such, guidance for total deliveries in the second quarter indicate a figure between 21,000 and 22,000 vehicles.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…This is approximately double what was achieved in Q2 of 2020. But on a quarterly basis, it’s a lacklustre growth rate of 5% to 10%. Given that NIO’s share price is being primarily driven by future production expectations, I’m not surprised to see the share price suffer on the news. But on Friday, the stock made a U-turn. So what happened?The China Passenger Car Association published new data that revealed some troubling signs of vehicle sales for its largest competitor, Tesla. As a result, NIO became the best-selling electric vehicle brand for SUVs in China last month. Across its ES6, EC6, and ES8 models, the firm sold 7,102 vehicles, equating to roughly 23% of Chinese market share. Needless to say, this is an impressive achievement given the unfavourable operating environment. And so, seeing the NIO share price jump back up is not that surprising to me.Looking aheadThe demand for electric vehicles continues to surge as the world reduces its reliance on fossil fuels. In fact, according to a report from Deloitte, electric vehicles sales are estimated to reach 31.1m by 2030. Comparing that to the 3m electric vehicles sold last year, manufacturers like NIO have enormous growth potential. And with China accounting for more than 40% of the market, the firm looks like it’s in a powerful position based on its latest achievements.However, as promising as NIO’s progress has been, I have some reservations about its share price. Since the start of 2021, the stock is down by around 37.5%. But over the last 12 months, it’s still up by 870%, placing its market capitalisation at $55bn.By comparison, total revenue for 2020 was around $2.5bn, yielding a high price-to-sales ratio of 22. Analyst forecasts expect sales to increase to $8.6bn this year, making the valuation look more palatable. However, it also implies that the NIO share price is primarily driven by shareholder expectations rather than existing underlying performance. Combining that with the fact that NIO is unprofitable does add a considerable level of risk. At least, I think so.Some final thoughtsThe semiconductor shortage is ultimately a short-term problem. And as demand for electric vehicles continues to rise, I believe that NIO can become a leading manufacturer within Chinese markets. The valuation is by no means cheap. But the growth potential that lies ahead may be worth paying the premium. And so, I would consider adding this business to my portfolio. Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Zaven Boyrazian does not own shares in NIO Inc. The Motley Fool UK owns shares of and has recommended NIO Inc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. See all posts by Zaven Boyrazianlast_img

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