Chinese EV supplier Nio (NYSE:NIO) looked like a penny stock ready for de-listing months ago. And after its surge in recent weeks on hopes of a cash infusion, analysts still see significant upside. Only three analysts cover the stock, so if the rally continues, they will look like geniuses.
NIO stock has an average price target of $6.88 (per tipranks). Bullishness is on the rise because the company may get $1 billion invested into the company from GAC. GAC Group is a state-owned automaker in China. In effect, the Chinese government will bail out Nio.
Sadly, Nio has a great product while its business model flounders. The ES6 has solid acceleration in sports mode, for example. Its ES8 suits families. It just needs funding to continue operating. In Q3/2019, Nio ended the quarter with RMB2.0 billion ($291.6 million US). It lost RMB2.5 billion in the period. Without a cash infusion, Nio will run out of funds by next quarter.
Outlook
Nio forecast Q4 deliveries of over 8,000 units. This is a 67% increase Y/Y. Revenue will increase by 53% to RMB2.8 billion ($408 million US). Nio already received $90.5 million US from William. It already booked the $100 million US from Tencent in its Q3 report.
Looking ahead, R&D efforts are ongoing as the company finds ways to cut costs here. In Q4, Nio will update investors with that progress.
Nio’s rally on the markets will continue as investors remove the bankruptcy risks.
