NIO’s sales are up 481% this quarter, but just how far up can this stock go over the next year, and to 2025? We hear tons of hype on YouTube about NIO, but little about their financial facts – is this company growing?
NIO’s stock dropped on July 23rd when more news came out about China cracking down on Chinese stocks. Today, we are going to dive into what the experts are predicting, and if we are concerned about NIO’s stock price future?
I spent hours poring through articles and NIO’s financials, to aid in a decision whether it made sense to buy more shares of this stock to hold for the long-term, and that potential big run-up in price.
In the past I worked for years with Fortune 500 CFOs and financial consulting teams, to help companies determine where they were making money. Now I use this knowledge to dig into HCMC’s details.
But this is not financial advice, and for entertainment only.
In looking back at 72 tickers I day-traded in 2018, if I had done the type of analysis I’m sharing with you today, I would have held on to more of these stocks. 77% of them would mean big profits today. I spent just $37,000 on seven of these trades, that would now be worth $441,598!
You’ll notice that I bought NIO in November of 2018 for only $6.30, and today, upwards of $40 per share! The purpose of this series is to help uncover these stock gems that have better odds of make big profits.
Hi investing friends, this is Lynn, and welcome back!
So Let’s go and review NIO!
First, let’s look at Analysts’ projections for NIO over the next year.
TipRanks show 9 analysts forecasting a price target, over the next 12-months, of $64.22, with a high target of $81. This would mean a 46% increase from NIO’s stock price of $43.99.
But, I always look at the individual Analysts forecasts and their success rate in providing accurate target prices.
The two Analysts with the highest success rate for their NIO price targets, are Vijay Rakesh, and Jeff Chung, both with a success rate of 75%. Both of these analysts have a 75% success rate, and you’ll notice that Jeff Chung’s forecast have meant an average 40% return for his predictions with NIO. Chung’s 12-month price target for NIO is 72 dollars!
Now let’s talk about the all-important financials to check-out how NIO is doing and growing.
In looking at NIO’s yearly income statement from Yahoo Finance, you can see that in 2017 they didn’t have any revenues. Since then, their revenues and gross margin have been steadily growing!
Remember that these numbers are all in Chinese CNY, not US dollars They are also reflected in thousands, so you need to add three zeros to the numbers that I am sharing here. But you’ll get the idea, as the percentage increases remain the same.
NIO’s trailing 12-month numbers look really great at over 22 million, with a gross profit of 3.5 million.
We know that companies can manipulate their revenue numbers in various ways, which are allowed by current reporting practices. But they aren’t permitted to manipulate the Operating Cash Flow or Free cash flow numbers.
The operating cash flow is the cash that a company has raised from their own operations or efforts, versus through loans, for example. The most important are the Free Cash flow numbers, which reflect the Operating cash flow, minus related expenses. This free cash flow gives us an excellent idea of the health of a company, and about the money that will be available for shareholders.
You can see here NIO’s yearly Operating cash flow of over 1.9 million was finally positive in 2020. Plus they also finally have a free cash flow of over 823 thousand! This is great news.
In reviewing NIO’s report for the First Quarter of 2021, here are some motivating highlights:
| · | Deliveries of vehicles were over 20 thousand, in the first quarter of 2021, representing an increase of 422% from the first quarter of 2020 and an increase of 15% from the fourth quarter of 2020. |
| · | Vehicle sales were $1.1 million in US dollars, in the first quarter of 2021, representing an increase of 489% from the first quarter of 2020 and an increase of 20% from the fourth quarter of 2020. |
| · | Vehicle marginii was 21%, compared with negative 7% in the first quarter of 2020 and 17% in the fourth quarter of 2020. |
| · | Total revenues were 1.2 million in US dollars for the first quarter of 2021, representing an increase of 481% from the first quarter of 2020 and an increase of 20% from the fourth quarter of 2020. |
Cash and cash equivalents, restricted cash and short-term investment were $7.3 billion in US dollars as of March 31, 2021.
Gross Profit in the first quarter of 2021 was $237.3 million in US dollars, representing an increase of 36.2% from the fourth quarter of 2020. |
| · | Gross margin in the first quarter of 2021 was 19%, compared with negative 12% in the first quarter of 2020 and 17% in the fourth quarter of 2020. The increase of gross margin compared to the first quarter of 2020 and the fourth quarter of 2020 was mainly driven by the increase of vehicle margin in the first quarter of 2021. |
In looking at NIO’s great financial progress, I agree with Chung’s 12-month forecast of $72 per share. I also think it is likely that NIO could hit more than $150 per share in 2025. But remember, this is not financial advice, and you will have to do your own do diligence.