The Zacks Analyst Blog Highlights NIO, Tesla and Citigroup

For Immediate ReleaseChicago, IL – October 2, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: NIO Inc. NIO, Tesla, Inc. TSLA and Citigroup Inc. C.Here are highlights from Tuesday’s Analyst Blog:Under $10 NIO Stock Surges With New Capital – Should You Buy? Persistent rise in selling and advertising expenses, and increasing operational costs weighed on electric vehicle (EV) manufacturer NIO Inc. throughout the year. However, things are now looking brighter for the NIO stock amid increased investments, Chinese stimuli, and growing demand for its newest models. So, is this an apt moment for investors to buy the NIO stock below $10? Let’s explore –NIO Stock Bounces BackFor most of the year, the NIO stock has given its investors fewer reasons to rejoice as its shares are down 26.3% year to date.However, things began to turn around for the EV maker in the last month, with the NIO stock outperforming the Automotive - Foreign industry (+65.3% vs +0.9%).The NIO stock is up 25.6% in the past five sessions and recently broke above the 200-day moving average (DMA), signifying a bullish trend. So, what’s behind the current uptrend?NIO Gets New InvestmentNIO’s shares shot up after the company declared fresh cash investment from its strategic investors in China. These investors are expected to inject RMB 3.3 billion ($470 million) into NIO China, the primary operating unit.NIO’s ownership will be more than 88% in NIO China, while the strategic investors will hold nearly 12%. NIO is also providing cash to bolster its struggling China unit.To make the business profitable, EV start-ups like NIO need more cash. Analysts are projecting that NIO will use around $2.8 billion in cash to build its business this year. Moreover, cash burns are expected to be $1.1 billion and $850 million in 2025 and 2026, respectively.China’s Stimulus a Boon for NIO StockDue to the property and unemployment crisis, China’s ailing economy recently got a boost from the People’s Bank of China’s (PBOC) rollout of significant stimulus measures. Governor of PBOC, Pan Gongsheng said that from reserve requirements to short-term interest rates, all will be lowered to aid the economy.These stimulus measures to revive the economy bode well for NIO as they increase the consumers’ purchasing power and enable them to acquire high-end EVs such as the ES8 and ET9. China’s economic stimulus, thus, propelled the NIO stock higher.NIO’s New Models – A Game ChangerThe NIO stock is further expected to get a boost from the new launch of its sought-after low-priced model Onvo L60, which is expected to give stiff competition to rival Model Y of Tesla, Inc.The price of the L60 model with BaaS (battery as a service) is $21,200, while the Tesla Model Y starts at $35,280, making the Onvo L60 model cheaper by 40%.The Onvo L60’s drag coefficient is lower than Tesla’s Model Y, helping the car to reduce energy consumption. The Onvo L60’s space is more than Model Y, as a result, its wheelbase is 2950 mm, much longer than Tesla’s 2890mm. So, the Onvo L60 out-competes the Model Y in price, performance, and comfort.NIO – Surpasses Production GoalsRecent deliveries above the required target and improvement in vehicle margins also boosted the prospects of NIO. In the second quarter, revenues improved as NIO registered delivery of 57,373 vehicles, up 143.9% from a year ago. The sales of the premium smart EVs easily surpassed the 20,000-unit delivery threshold.As components and supply-chain costs improve, vehicle margins are increasing. In the second quarter, vehicle margins were 12.2% and compared favorably with 6.2% a year ago. Moreover, NIO expects vehicle margins to increase to around 15% by the year-end.Is This the Right Time to Buy NIO Stock?Stakeholders should retain their market shares in NIO stock. This is because the NIO stock is poised to gain banking on fresh capital from Chinese partners, China’s stimulus bazooka, competitive pricing of new models, and the significant increase in production of EVs to cater to growing demand.The recent cash injection encouraged Citigroup Inc.’s Jeff Chung to raise NIO’s short-term price target to $8.90 a share from the current $6.7. Kevin Lau of Daiwa Securities Group also lifted NIO’s price target to $10.However, the company’s operational efficiency is uncertain. After all, NIO’s debt-to-equity of 71.5% exceeds the peer group’s 23%, indicating higher debt on its balance sheet than competitors. Thus, new entrants should place their bets on the NIO stock once operational inefficiencies are addressed.The NIO stock has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.See Stocks Free >>Media ContactZacks Investment Research800-767-3771 ext. 9339support@zacks.comhttps://www.zacks.comPast performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.7% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Citigroup Inc. (C): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis Report NIO Inc. (NIO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks