Written by Cláudio Afonso | LinkedIn | X
Goldman Sachs analyst Tina Hou issued a research note on Monday downgrading the U.S.-listed shares of the EV maker Nio from Neutral to Sell, lowering the price target by 19% to $3.90.
The analyst said the firm expects a “limited new model pipeline for the Nio brand and a slow production ramp-up” for the company’s first sub-brand, Onvo. Additionally, Hou mentioned that the network expansion for the brand unveiled in May will increase sales and marketing (S&M) expenses.
Based on Friday’s closing price of $4.84, Goldman’s new price target implies a downside of about 19.4%.
“We downgrade Nio from Neutral to Sell, as we expect limited new model pipeline for the Nio brand and slow production ramp-up for Onvo to position the company unfavorably into 2025E, with potentially intensified competition starting in the first quarter of next year,” Hou wrote.
The company delivered 20,976 electric vehicles in October, including 4,319 units of its sub-brand Onvo and 16,657 Nio-brand units. Last month’s figures represent an increase from the 16,074 units recorded in October 2023 and 3,692 fewer EVs than in September.
Initially, Onvo had targeted 5,000 units delivered in October. Currently, the company expects December deliveries to surpass 10,000 units and more than 20,000 in March next year.
During its third-quarter earnings call, Nio announced plans to expand its lineup next year with several revamped models upgraded to its NT 3.0 platform, two new SUVs under the Onvo brand, and the debut of Firefly’s first model. The upgrade of Nio’s existing models is planned to take place in 2025 and 2026, according to the company’s CEO William Li.
“In addition, as the company continues to expand the sales network of the Onvo brand, we expect growing S&M expense together with elevated R&D expense to drag down operating losses, hindering the company’s path to profitability in the next three years,” the analyst added.
Goldman Sachs estimates a 24% downside risk to the consensus 2025 non-GAAP net loss projections for Nio.
The downgrade follows an earlier update in October when Hou raised her price target for Nio’s Hong Kong-listed shares by nearly 12%, from HK$34.00 to HK$38.00. By then, HK shares had closed approximately 15% higher than Goldman’s price target.
On Monday, Nio’s Hong Kong-listed stock gained 4.4%, closing at HK$37.55.
The company marks its 10th anniversary this Monday. Earlier today, Nio’s Chief Executive William Li sent an internal letter to employees, describing the current period as “the most intense phase of the qualifying round” and emphasizing that “only a few” brands will “remain standing” within the next two to three years.
After launching its first sub-brand Onvo in May, Nio will unveil the second one, Firefly, at its annual event on December 21 with deliveries of the debut model starting in the first half of 2025.
Written by Cláudio Afonso | LinkedIn | X
