Here's Why Nio Stock Is a Buy Before September
Key Takeaways
The Chinese EV maker looks like an undervalued growth stock.
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investment
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July 25, 2025
03:23 AM
The Motley Fool
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Moreover, 20%), a major ducer of electric vehicles (EVs) in China, has been a disappointing investment over the past few years
Its stock currently trades at $5 compared to its initial public offering (IPO) price of $6. 26 per American depositary (ADS) in September 2018 and its record closing price of $62. 84 in February 2021
Nio initially impressed the bulls with its soaring deries, and the buying frenzy in meme stocks amplified those gains
However, its stock pulled back as its deries slowed down, and it racked up steep losses
Rising rates drove investors back toward safer investments
What the re reveals is trade war between the U
And China made its stock even less appealing
However, Image source: Getty Images
But as Warren Buffett famously said, investors should be "greedy when others are fearful," and there's a lot of fear baked into its current stock price
On the other hand, Let's take a contrarian view and see why Nio's stock could be worth buying ahead of its second-quarter report in early September
Moreover, Its battery-swapping network is expanding Nio duces a wide range of electric sedans and SUVs under its namesake brand, in this volatile climate
Market analysis shows s newer Onvo and Firefly sub-brands sell cheaper SUVs and compact cars, respectively
It differentiates its vehicles from other Chinese EVs with its swappable batteries, which can be quickly swapped out at its power swap stations as a faster alternative to traditional chargers
Its drivers can pay for those battery swaps on an individual basis or to a "battery as a service" (BaaS) plan for lower rates
However, In contrast, At the end of June, Nio operated 3,445 power swap stations across China and Europe
On the other hand, That's up from just 777 stations at the end of 2021 (remarkable data), considering recent developments
Expanding that network is a capital-intensive effort, but it should increase the stickiness of its brand, widen its moat against its competitors, and plant the seeds for higher-margin recurring BaaS revenues
It's also been working with several major investors, including China's battery-making giant CATL, to fund the future growth of that network
This demonstrates that s deries are rising Nio's annual deries more than doubled in 2020 and 2021 but only grew 34% in 2022 and 31% in 2023
That slowdown -- which it attributed to tougher competition, macroheadwinds in China, and adverse weather conditions -- spooked a lot of its investors
But in 2024, its annual deries rose 39% to 221,970 vehicles
That growth was driven by its robust sales of Nio ET series sedans and Onvo SUVs in China, which boosted its domestic market against its rivals, as well as its expansion into Europe
Nio's deries rose 40% year over year to 42,094 vehicles in 2025's Q1
Furthermore, In the first half of the year, its total deries increased nearly 31% year over year to 114,150 vehicles as its new Onvo and Firefly brands attracted more budget-conscious consumers
Those rising deries indicate Nio still has plenty of room to expand in China and Europe in the coming years even if its days of doubling its annual deries are over
Additionally, For 2025, analysts expect Nio's revenue to rise 37% to 90
However, 2 billion yuan ($12
From 2024 to 2027, they expect its revenue to increase at a compound annual growth rate (CAGR) of 26% to 132
However, 7 billion yuan ($18
Moreover, 5 billion) as it continues to roll out new vehicles
The evidence shows s vehicle margins are stabilizing Nio's annual vehicle margin reached a record high of 20 (fascinating analysis). 1% in 2021, but it plummeted to 9 (something worth watching). 5% in 2023 as it grappled with the pricing war in China's EV market and inflationary headwinds
But in 2024, its vehicle margin rose to 12
Conversely, 3% as it sold a higher mix of Nio's premium sedans, diluted its duction costs, and lined its other expenses
However, Nio expects its namesake brand to maintain a vehicle margin of "around 15%" for 2025's Q2 (this bears monitoring)
Conversely, That stability should offset some of the pressure from its lower-margin Onvo and Firefly brands (something worth watching)
Furthermore, It bably won't come anywhere close to achieving a 20% vehicle margin again, but its vehicle margins should continue to stabilize as economies of scale kick in
That's why analysts expect Nio to narrow its net loss from 22
At the same time, 7 billion yuan ($3
Conversely, 2 billion) in 2024 to 7 (something worth watching). 6 billion yuan ($1. 1 billion) in 2027, in today's financial world
They also expect its earnings before interest, taxes, depreciation, and amortization (EBITDA) to turn positive by the final year, given the current landscape
Its valuation looks dirt cheap Lastly, Nio still trades at a deep discount to its growth potential presumably because the tariffs and trade tensions are driving investors away from Chinese stocks (which is quite significant), in today's financial world
However, With an enterprise value of 67, given the current landscape. 9 billion yuan ($9. 5 billion), it trades at just 0
Additionally, 8 times this year's sales, considering recent developments
Meanwhile, For reference, Tesla (TSLA 1
However, 83%) trades at 10
On the other hand, 9 times this year's sales
So if you expect Nio's to stabilize with narrowing losses as the trade tensions wane, it might be a great idea to accumulate this unloved stock before it posts its Q2 earnings report
Any good news could force investors to revalue its s and send them soaring much higher (something worth watching).
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