Nio’s (NYSE:NIO) breakout in the last week should not surprise its loyal investors. The company’s market cap is nowhere near that of Tesla (NASDAQ:TSLA). Yet the unit sales grew in the last few months at an incredible pace.
Nio’s next milestone is reporting a small profit. The battery leasing solution not only lowers the MSRP but creates a sustainable, consistent source of recurring revenue for Nio. Nio posted September deliveries of 4,708 vehicles, up 133.2% year-on-year. Deliveries for the quarter grew 154.3% to 12,206 units.
The record-high unit growth, for seven months in a row, is no small feat. Earlier in the year, Covid-19 restrictions in China nearly decimated the company’s liquidity. Investments from Chinese companies and a stock sale on at least two occasions added cash to Nio’s balance sheet. The risks of bankruptcy are no longer on the table.
Nio’s climb from the $1.36 low to close to $30 may tempt shareholders to lock in profits. And since the EV market is still in its infancy, it makes no sense to sell yet. Tesla is worth more than 10 times that of Nio and is cutting unit prices. Nio faces no such competition and need not do the same.
Nio will take more market share for EV in China in the years ahead. Investors will bid shares of Nio higher as a result.
Hold Nio stock.
