NIO Inc. (NYSE:NIO) shareholders might be concerned after seeing the share price drop 11% in the last week. But that doesn’t displace its brilliant performance over three years. In fact, the share price has taken off in that time, up 555%. So you might argue that the recent reduction in the share price is unremarkable in light of the longer term performance. The thing to consider is whether there is still too much elation around the company’s prospects. Anyone who held for that rewarding ride would probably be keen to talk about it.
Although NIO has shed CN¥4.5b from its market cap this week, let’s take a look at its longer term fundamental trends and see if they’ve driven returns.
See our latest analysis for NIO
Because NIO made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. Shareholders of unprofitable companies usually expect strong revenue growth. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
NIO’s revenue trended up 64% each year over three years. That’s well above most pre-profit companies. And it’s not just the revenue that is taking off. The share price is up 87% per year in that time. Despite the strong run, top performers like NIO have been known to go on winning for decades. In fact, it might be time to put it on your watchlist, if you’re not already familiar with the stock.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
NIO is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. So it makes a lot of sense to check out what analysts think NIO will earn in the future (free analyst consensus estimates)
A Different Perspective
NIO shareholders are down 58% for the year, falling short of the market return. The market shed around 20%, no doubt weighing on the stock price. Investors are up over three years, booking 87% per year, much better than the more recent returns. The recent sell-off could be an opportunity if the business remains sound, so it may be worth checking the fundamental data for signs of a long-term growth trend. It’s always interesting to track share price performance over the longer term. But to understand NIO better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We’ve identified 1 warning sign with NIO , and understanding them should be part of your investment process.
But note: NIO may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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.