NIO (NIO) has returned to many investors’ watchlists after recent share price pressure, with the stock down over the past week, month and past 3 months while its business remains focused on global electric vehicle growth.
See our latest analysis for NIO.
NIO’s share price has been under pressure recently, with a 90 day share price return of a 29.51% decline and a year to date share price return of a 7.98% decline. The 1 year total shareholder return of a 9.49% gain contrasts with much weaker three and five year total shareholder returns.
If you are tracking NIO and other EV names, it can help to see how they compare to a wider group of auto manufacturers that are also trying to capture long term demand shifts in the sector.
With NIO trading at $4.73 and data pointing to a small intrinsic discount of about 4%, along with a larger gap to analyst targets, the key question is simple: is this genuine value or is the market already pricing in future growth?
Against NIO’s last close of US$4.73, the most followed narrative points to a higher fair value anchored in long term revenue and earnings potential.
In order for you to agree with the analyst’s consensus, you’d need to believe that by 2028, revenues will be CN¥148.4 billion, earnings will come to CN¥7.5 billion, and it would be trading on a PE ratio of 22.7x, assuming you use a discount rate of 13.6%.
Curious what has to happen for those earnings and that P/E to line up? Revenue, margins, and dilution all carry weight here. The full narrative connects the dots.
Based on the most widely followed valuation work, NIO’s fair value sits around US$6.75 per share, using a 12.47% discount rate that reflects the required return for its risk profile. That approach projects future cash generation, then discounts those cash flows back to today to estimate what the equity could be worth now.
The narrative ties this valuation to a scenario of higher revenue, a shift from sizeable losses to positive earnings, and a future earnings multiple that is materially higher than the broader US auto group. It also bakes in higher share count over time, which matters for per share outcomes, and still arrives at a value comfortably above the current price.
Result: Fair Value of $6.75 (UNDERVALUED)
Have a read of the narrative in full and understand what’s behind the forecasts.
However, you also need to weigh up execution and competition risk, as intense EV price pressure and large ongoing losses could make that optimistic earnings pathway much tougher.
Find out about the key risks to this NIO narrative.
That fair value of about US$6.75 is based on long term cash flows, but the market is also weighing NIO on its P/S ratio of 1.2x. That sits above the US auto industry at 0.6x and just above its own fair ratio of 1.1x, which hints at less room for error.
See what the numbers say about this price — find out in our valuation breakdown.
If you see the numbers differently or simply want to test your own assumptions against the data, you can build a custom NIO view in minutes: Do it your way.
A great starting point for your NIO research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
If NIO is on your radar, do not stop there. The market is full of other opportunities you can filter quickly with a few focused tools.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include NIO.
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