The NIO share price has plunged: should I buy the stock now?

July 5, 2021

first_img Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! Charlie Keough owns shares in Tesla. The Motley Fool UK does not own shares in any company mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Simply click below to discover how you can take advantage of this. “This Stock Could Be Like Buying Amazon in 1997” Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Image source: Getty Images. NIO (NYSE: NIO) has had a strong last 12 months, with its share price increasing 950% in this period. However, the last three months has seen a sharp decline, with it currently sat at around $35.Although the NIO share price has plunged, here I am going to explain why I still see the stock as a good long-term addition to my portfolio.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…NIO positivesIt is a well-known fact that demand for electric vehicles has rocketed over the course of the last year. A 2020 Deloitte report estimated that electric vehicle sales would reach 31.1m by 2030 – a considerately larger amount than the 3m sold in 2020, showing the potential market companies such as NIO have access to. This is seen through NIO delivery numbers, which for Q1 of this year were up 423% to just over 20,000 vehicles.The growing Chinese market also adds to the attractiveness of NIO stock, with China accounting for 41% of global electric vehicle sales in 2020. The inevitable future demand both domestically and internationally is one of the main reasons as to why I currently see real value in the NIO share price.To add to this, I have been wary in the past of the fact NIO has been operating at a loss. However, Q1 2020 saw net losses drop to just $54m – a sign that provides me with optimism for NIO shares.NIO doubtsWith this said, there are factors that fill me with doubt about adding NIO to my portfolio. Firstly, the current dip in the NIO share price is partly due to a worldwide semiconductor shortage. The problem arose at the outbreak of the pandemic last year. The earlier-than-expected reopening of many factories has led to a surge in demand in the chips, outweighing the supply. This has led to NIO having to suspend production for periods of time. This issue highlights the fragility of the NIO production line and the issues this could bode in the future – something that I believe could have a major negative impact on the NIO share price.Along with this, the tech sell-off we have seen in recent months, as detailed by Dylan Hood in his latest article on NIO, may provide issues for the electric vehicle producer.Finally, regardless of the dip, I must question the valuation of the NIO share price. NIO has a market capitalisation of around $57bn, whereas an established competitor such as Ford is worth just $47bn. Ford sold 4.2m cars in 2020 and itself is expanding into the electric vehicle sector.My verdictAlthough at this current time there may be multiple issues that surround NIO, I see real potential in the stock. The expanding market is sure to cause a surge in demand and could be boosted by government legislation. Short-term issues may cause doubt, but from a long-term perspective I see vast opportunities in the current NIO share price. With the Tesla share price currently sat well over $600, I must ask myself whether NIO could emulate this in years to come. The NIO share price has plunged: should I buy the stock now?center_img Our 6 ‘Best Buys Now’ Shares Charlie Keough | Wednesday, 12th May, 2021 | More on: NIO I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Enter Your Email Address I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. 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