Market Overview

Nio's Stock Price Reflects 'Over-Optimism': Goldman Sachs Downgrades To Sell

Nio's Stock Price Reflects 'Over-Optimism': Goldman Sachs Downgrades To Sell

Nio Inc – ADR (NYSE: NIO) shares are cooling off following a strong rally since reporting its monthly deliveries in early July.

The Nio Analyst: Goldman Sachs analyst Fei Fang downgraded Nio from Neutral to Sell and reiterated the $7 price target, suggesting 46% downside from current levels compared to the 16% drop for China OEMs the firm covers.

The Nio Thesis: Following the 89% rally over the past month, Nio's stock price currently reflects "over-optimism," considering the fact there are no substantial changes to volume/profit expectations, Fang said in a Friday note.

In the short term, the analyst expects capital injection at Nio China to fund its 10-billion-yuan cash burn in the next two years. In fiscal years 2020, 2021 and 2022, revenues are estimated to grow 80%, 86% and 72%, respectively, helped by volume expansion of existing SUV models and launch of new products.

Fang forecasts store network size to rise from 70 outlets, including Nio House and Nio Space, at the end of 2019 to 200 by December. The analyst also looks ahead to improvement in margins, leading to significant free cash flow improvement in the coming years.

Delving into the prospects for the long term, the Goldman Sachs analyst believes Nio's investment case will be based on the optionality for China's structural auto premiumization and EV adoption, combined with the scarcity of being China's first home-grown high-end passenger vehicle brand.

"The Nio brand's positioning provides the premium pricing power that we expect the company to leverage across model cycles and powertrain technologies," Fang wrote in the note.

Goldman estimates Nio's market share of premium vehicles at 1.2% in 2020. This is expected to improve to 5.8% in 2025 and 7.4% in 2030.

NIO Price Action: Nio shares were down 9.3% to $11.72 at the time of publication.

Related Links:

Several Fundamental Risks Overlooked As Tesla Approaches $2,000: Morgan Stanley

Chinese EV Manufacturer Li Auto Files For Nasdaq Listing

Latest Ratings for NIO

Jan 2021Nomura InstinetInitiates Coverage OnBuy
Jan 2021JefferiesInitiates Coverage OnHold
Jan 2021CitigroupDowngradesBuyNeutral

View More Analyst Ratings for NIO
View the Latest Analyst Ratings


Related Articles (NIO)

View Comments and Join the Discussion!

Posted-In: China electric vehicles EVs Fei FangAnalyst Color Downgrades Top Stories Analyst Ratings Best of Benzinga

Latest Ratings

JNJCantor FitzgeraldMaintains200.0
PCTYJMP SecuritiesMaintains220.0
KMBRBC CapitalMaintains147.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at