Nio (NIO 1.43%) might be making progress on several fronts, but the stock hasn’t been reflecting it. And now, one Wall Street analyst has cut his firm’s price target on the Chinese electric vehicle (EV) maker by one-third.
J.P. Morgan‘s Nick Lai has suggested owners of U.S.-listed Nio shares continue to hold them but doesn’t recommend buying more right now. He has slashed his price target on the shares from $7 to $4.70, according to reports.
The new target price still represents about 10% more upside from recent levels, but Lai doesn’t think the business is growing the way it should. Investors seem to agree: The stock has dropped more than 20% over the last year.
Nio’s brand shift
Lai’s issue with Nio is where its sales are coming from. Its 2024 vehicle deliveries rose nearly 40% versus 2023, but its newest EVs are high-end luxury cars like its ET9 executive sedan. With a list price starting at about $100,000, that type of EV has a limited market.
Nio launched a lower-priced brand called Onvo last year, but sales of that family-focused, smart EV only represented about one-third of deliveries in December and January. The company is working to grow its mass market appeal, though.
A new budget brand called Firefly is a compact hatchback EV. The official launch is expected in April. It may still be early to buy Nio stock, but investors with a long-term view could see benefits starting to come from its lower-priced brands in the next year. If EV sales do accelerate with the help of Onvo and Firefly, the stock may very well respond. That could take another year or so, though.
JPMorgan Chase is an advertising partner of Motley Fool Money. Howard Smith has positions in Nio. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.