Should You Buy Nio Stock While It's Below $5?
Nio projects sales of 450,000 units this year, doubling its sales from last year.
The company's unique battery-as-a-service offering enables quick battery swaps, addressing concerns about charging time and creating a recurring revenue stream.
Nio faces fierce competition in China's electric vehicle market and has encountered challenges to international expansion, such as tariffs and duties on Chinese EVs.
10 stocks we like better than Nio ›
Nio (NYSE: NIO) is making huge strides. The Chinese automaker projects it will sell a staggering 450,000 units this year, more than double its sales from last year. With such explosive growth, investors may be wondering if it's time to get on board and invest in the automaker.
While Nio is charging ahead in the electric vehicle race, it faces fierce competition in its home market and has to navigate the complex landscape of global geopolitical tensions. With the stock priced under $5 -- $4.47 at 9:30 a.m. ET on Monday -- is now the time to buy? Let's explore the business and investment opportunity ahead.
Nio's sales growth has been excellent
Nio continues to increase its vehicle deliveries and expand its market presence. Last year, the company achieved record deliveries of 221,970 vehicles, representing a 39% increase over the previous year. It recently reported sales of 72,056 units in the second quarter, representing a 26% increase from the same period last year.
A unique aspect of Nio's business is its battery-as-a-service offering, which addresses a common concern for many electric vehicle (EV) drivers: charging time. With its battery swapping technology, at designated locations, Nio can replace a depleted battery with a fully charged one in just 3 to 5 minutes.
With this system, customers pay less upfront cost when purchasing a vehicle, instead paying a fee over time, which provides Nio with a steady stream of recurring income. Analysts at Western Securities, a Chinese investment bank, believe that this segment of Nio's business could break even by 2026.
It faces some serious headwinds
The electric vehicle market is highly competitive, particularly in China, and Nio faces significant challenges in this environment. Analysts have noted that competition in China's battery electric vehicle sector is "fierce." This intense competition ultimately impacts Nio's ability to increase sales volume, maintain favorable pricing, and achieve profitability.
In the first quarter, revenue fell short of estimates and missed the company's guidance. The decline was primarily attributed to lower selling prices and increased promotions aimed at clearing out the inventory of older Nio models, as well as a higher proportion of sales from the Onvo brand, which targets the "mainstream family market, ultimately impacting its profit margins.
The manufacturer also faces several geopolitical headwinds. For instance, last year, the European Commission imposed duties on imports of battery electric vehicles (BEVs) from China, effective Oct. 30, 2024, for a period of five years. This decision was driven by concerns over substantial government subsidies that benefit Chinese EV makers. Additionally, former U.S. President Joe Biden raised tariffs on Chinese EVs to 100%, while current President Donald Trump announced additional tariffs on goods imported from China.
Nio's cost-cutting efforts
Another criticism of Nio lies in its growing losses. Since its inception, the company has consistently struggled to turn a profit due to its capital-intensive business model, which requires substantial investments in research and development, expansion of production capacity, and the establishment of its power and service networks.
Last year, Nio reported a net loss of RMB 22,402 million (approximately $3 billion). In the first quarter of this year, the company's losses increased to RMB 6,750 million (approximately $930 million), representing a 30% rise compared to the same quarter last year.
NIO Revenue (TTM) data by YCharts
The company is taking steps to improve profitability. In the first quarter, its vehicle margin increased to 10.2%, up from 9.2% in the same period a year earlier. Nio has taken steps to control costs by reducing spending, including restructuring and improving efficiency across research and development, the supply chain, and sales and services.
Goldman Sachs has upgraded the automaker to a neutral rating, citing the company's cost reduction efforts, and anticipates a 4%-10% improvement in profit levels over the next three years. Looking ahead, Nio CEO William Bin Li is optimistic about achieving profitability by the fourth quarter of 2025, thanks to the cost-cutting and restructuring initiatives. The company also projects doubling sales to 450,000, but Goldman analysts estimate sales could be closer to 337,000.
Is Nio stock a buy?
Nio is experiencing significant growth in China, with increasing deliveries and rising revenue. The company has a unique battery-as-a-service offering that differentiates it from competitors. However, it faces stiff competition in China along with headwinds from geopolitical trade tensions.
The stock is currently trading at a 0.95 price-to-sales ratio. Investors who are optimistic about its long-term potential and willing to overlook geopolitical tensions and fierce competition may want to consider buying the stock at that price.
That said, its ongoing unprofitability and vulnerability to external economic and political pressures are headwinds for the stock. Before making a purchase, I'd look for improvements in its efficiency, along with signs that it is capturing a growing market share in China and improving its bottom line. Until then, most investors are best off looking elsewhere.
Should you invest $1,000 in Nio right now?
Before you buy stock in Nio, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nio wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $652,133!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,056,790!*
Now, it's worth noting Stock Advisor's total average return is 1,048% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of July 21, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
10 hours ago
- Globe and Mail
What Are the 3 Best Bargain Artificial Intelligence (AI) Stocks to Buy Right Now
Key Points Taiwan Semiconductor's projected growth should translate into a higher premium than it is currently trading at. The market is concerned that AI will disrupt Adobe's business. Google Search is a primary target of several generative AI companies. 10 stocks we like better than Alphabet › Finding bargains in the artificial intelligence (AI) investing world isn't easy, but they're out there. Three that I've got my eye on are Taiwan Semiconductor (NYSE: TSM), Adobe (NASDAQ: ADBE), and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL). All three of these trade at a hefty discount to the broader market, yet are still quite promising. If you're looking for value in the AI space, this trio is an excellent starting point. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » How do these three fit into AI? Taiwan Semiconductor is the best-positioned of this trio. It's the primary chip fabricator for some of the leading tech companies, including Nvidia and Apple. Its chip production facilities fabricate chips that its customers have designed, placing TSMC into a neutral position in the AI race. It performed phenomenally well over the past few years, with revenue in U.S. dollars rising an astounding 44% in the second quarter, which exceeded expectations. This strength is expected to persist for many years. Management guided at the start of 2025 that it expects its revenue to increase at nearly a 20% compound annual growth rate over the next five years. Taiwan Semi is a key player in AI technology, and it holds an enviable position. Adobe makes leading graphics design tools that are the industry standard. Whether it's video editing or image creation, Adobe is a top option. However, investors are growing increasingly concerned that generative AI creation technologies could displace Adobe. Image and video creation using generative AI models has come a long way, and has reached a point where it's nearly indistinguishable from what humans create. As a result, many are forecasting the downfall of Adobe. However, I think that's a bit premature. Adobe has also invested heavily in generative AI and has its own Firefly product that allows seamless integration of AI with its existing editing tools. This allows Adobe to compete in this realm while also giving creators more control over the end product than what many generative AI models do. This could keep Adobe relevant within the graphic design industry, making the forecast of its downfall somewhat inaccurate. Currently, Adobe is performing well and has posted consistent revenue growth over the past few years. ADBE Operating Revenue (Quarterly YoY Growth) data by YCharts. If Adobe is supposed to be getting displaced, don't tell it that, as it's still growing at a healthy pace. Last is Alphabet, the parent company of the Google Search engine. Its stock is running into the same fears as Adobe's, as investors worry that generative AI will replace Google Search. While some have made the switch, investors need to remember that Google is an ingrained habit among internet users around the globe. It would take a massive technological leap, which most users won't need anyway, to get them to switch. Google has already implemented the popular AI search overviews feature, which seamlessly integrates search results and AI, and that could be enough to maintain the vast majority of its dominant market share. If Google Search can maintain most of its market share, the stock is poised to move higher, as it trades at a significant discount to the broader market. How cheap is this trio? Alphabet's stock trades at a deep discount to the broader market, despite strong results. GOOGL PE Ratio (Forward) data by YCharts. Considering that the S&P 500 trades for 23.8 times forward earnings, this seems like a reasonable price to pay for the upside that Alphabet provides. Adobe is similarly cheap, trading for 18 times forward earnings. ADBE PE Ratio (Forward) data by YCharts. Taiwan Semiconductor is actually more expensive than the broader market at 25 times forward earnings. However, it's expected to grow at essentially double the pace of the market over the next five years, so this slight premium to the market seems a bit low. As a result, I'm confident labeling Taiwan Semiconductor as a bargain buy right now. Should you invest $1,000 in Alphabet right now? Before you buy stock in Alphabet, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025
Globe and Mail
13 hours ago
- Globe and Mail
Better Beverage Stock: Coca-Cola vs. PepsiCo
Key Points Coca-Cola appears to have the edge when comparing recent stock performances. Investors should also take PepsiCo's valuation and dividend returns into account. 10 stocks we like better than PepsiCo › Although earnings season has barely started, both PepsiCo (NASDAQ: PEP) and its archrival, Coca-Cola (NYSE: KO), have already reported earnings for the second quarter of 2025. The waning popularity of soda beverages and, in PepsiCo's case, the falling demand for snack foods, have translated into anemic growth for both companies. One thing to remember about both stocks is that they have become popular among dividend investors, each maintaining a record of annual dividend hikes for more than half a century. Amid such conditions, one beverage stock may ultimately stand out as a more suitable choice for most investors. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Comparing the two businesses Although a flagship cola product defines each stock, both companies are diversified beverage holdings. Each controls numerous brands under their umbrellas, and their selections encompass juices, coffees, teas, and waters. Additionally, both companies are now in the alcohol business. Coca-Cola entered this arena by offering Topo Chico hard seltzers, and PepsiCo has partnered with other companies to sell branded beverages like Hard Mountain Dew and Lipton Hard Iced Tea. Additionally, as previously mentioned, PepsiCo is in the snack business, owning such packaged food brands as Frito-Lay and Quaker. Unfortunately for both companies, a nutrition-inspired pivot has impacted sales, and this is particularly true of PepsiCo, whose customers are increasingly seeking healthier snack options. To that end, both companies have agreed with the Trump administration to produce cane sugar versions of their flagship colas, as more consumers turn away from high-fructose corn syrup. How the numbers compare However, such initiatives have not yet translated into higher sales. Furthermore, healthier ingredients often cost more, which will inevitably lead to higher input costs. As a result, both companies reported Q2 revenue increases of 1%, with price increases offsetting a slight drop in sales. From there, the results diverge, at least initially. Coca-Cola's Q2 net income was $3.8 billion, up from $2.4 billion in the year-ago quarter. Other operating charges fell from almost $1.4 billion in Q2 2024 to just $71 million one year later, accounting for nearly all of the improvement. In contrast, PepsiCo's $1.3 billion in Q2 net income was down from $3.1 billion 12 months ago. Still, if not for the $1.9 billion impairment charge on intangibles, net income would have narrowly increased. Thus, without one-time charges, the results seem to closely approximate each other. Even with their numerous similarities, Coca-Cola's stock has outperformed PepsiCo's over the previous year. PEP data by YCharts However, that outperformance does not necessarily make Coca-Cola the clear choice, even though Coca-Cola's P/E ratio of 28 is not significantly higher than PepsiCo's 27 earnings multiple. When comparing forward P/E ratios (which exclude one-time charges), PepsiCo's 18 forward price-to-earnings ratio is considerably lower than Coca-Cola's, a stock which trades at a forward P/E ratio of 23. Furthermore, PepsiCo may stand out with dividend investors. Both stocks are Dividend Kings by virtue of their long-established track records of annual payout hikes. Still, PepsiCo's dividend yield of almost 3.8% far outpaces Coca-Cola's at around 2.9%, arguably making PepsiCo a better fit for income investors. PEP Dividend Yield data by YCharts Coca-Cola or PepsiCo? As for which stock to choose, investors do not have a bad choice in the sense iconic brands will likely drive rising sales for both companies for years to come. However, if you're buying today, PepsiCo appears to offer a slight edge to shareholders. Admittedly, both stocks have offered growth and income to their long-term investors, and that is unlikely to change. Also, Coca-Cola's more recent outperformance may tempt investors to choose it. Nonetheless, both are mature, slower-growth companies, and that makes PepsiCo's attributes stand out. For one, since PepsiCo operates in both the beverage and snack industries, it offers a greater degree of revenue diversification. Also, while financial results appear similar in most respects, PepsiCo's forward P/E ratio suggests it is the lower-cost stock after factoring in one-time charges. Finally, thanks in part to a lower valuation, PepsiCo offers investors higher dividend returns. Since investors tend to buy these stocks for income, PepsiCo is probably the more suitable choice in most cases. Should you invest $1,000 in PepsiCo right now? Before you buy stock in PepsiCo, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and PepsiCo wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $636,628!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,063,471!* Now, it's worth noting Stock Advisor's total average return is 1,041% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 21, 2025
Globe and Mail
17 hours ago
- Globe and Mail
100 Days to 8th CIIE: Preps Harden as Global Exhibitors Eye Business Potential in China
Facing the complex international landscape and mounting challenges, China International Import Expo (CIIE) consistently acts as a platform for global business exchange. With only 100 days to go, the 8th CIIE is set to take place in Shanghai from November 5 to 10. As of now, over 50 countries and international organizations have confirmed their participation in the Country Pavilion. Sweden and the United Arab Emirates will serve as guest countries of honor at the 8th CIIE, while Kyrgyzstan will make its debut. To help global enterprises across sectors better integrate into the Chinese market, the Corporate Pavilion features six major exhibition areas—encompassing Medical Equipment and Healthcare Products, Automobile and Smart Mobility, Intelligent Industry & Information Technology, Consumer Goods, Food and Agriculture Products, and Trade in Services—and will continue hosting its Innovation Incubation Special Section. Driven by strong interest and participation from overseas companies, total booked exhibition space has surpassed 330,000 square meters, with 170 companies and 26 institutions becoming eight-time full-attendance exhibitors. Notably, this year's Corporate Pavilion introduces four fresh innovations, demonstrating its vibrant energy and vast collaboration opportunities for participants. l A special section for the least-developed countries products will launch alongside an upgraded Africa products section, helping 53 diplomatic African partners leverage zero-tariff treatment to enter the Chinese market. l A new section for overseas provinces and cities stands as another highlight. l Focused on global premieres, a dedicated trail for exploring debuts and a section amplifying exhibitors' presence are introduced. l A cross-border e-commerce platform will be established for specialized promotion, matching, and livestreaming. The 8th Hongqiao International Economic Forum (HQF) will convene under the theme 'Opening-up for New Opportunities, Cooperation for a Shared Future'. Alongside the release of the World Openness Report 2025 and the latest World Openness Index, the HQF will host over 20 parallel sessions on revitalizing multilateral cooperation, empowering digital intelligence, green and sustainable development, and a more open China. Side events will retain previous categories, while people-to-people exchange activities will add a new 'Charming Friends of City' zone, inviting international friendly provinces and cities to set up their booths. Stay tuned for the 8th CIIE – secure your spot now! Sign up as an exhibitor: Sign up as a professional visitor: Media Contact Company Name: China International Import Expo Contact Person: CUI Yan Email: Send Email Country: China Website:
