NIO shares are falling. This is what analysts say.

Text size

Chinese manufacturer of electric vehicles

NIO

he saw stock prices fall on Tuesday after reporting a drop in February deliveries that seemed to baffle investors. But stock analysts focused on the global shortage of microchips.

Shares of NIO fell about 8% on Tuesday in trading. The S&P 500 and Dow Jones Industrial Average fell by about 0.3% and 0.1%, respectively.

Wedbush analyst Dan Ives noted that the shortage will be a short-term advance not only for NIO (ticker: NIO), but for all of its competitors.

“The shortage of chips that has also affected the global car industry

Tesla

Recent price cuts have affected some positive market dynamics for NIO … although we believe this will be short-lived, “Ives wrote in a report on Tuesday. He still sees demand for electric vehicles” falling on his jaw. ” in China and expects NIO and others to sell everything they make.

Barclays analyst Brian Johnson noted Tuesday that industry data provider IHS estimates one million cars are at risk of not being built in 2021 due to a shortage of chips.

In a earnings call Monday, NIO officials said the company has enough chips to meet production targets during the second quarter; Johnson, however, fears the chips will continue to dwindle as the year goes on.

Global car companies make approximately 90 million cars a year. The IHS data point is a way to measure the chip shortage problem. “IHS noted this additional supply, which could offset the volume lost [first half 2021], will be delayed until [the fourth quarter] and reach 2022, ”Johnson wrote.

Ives and Johnson do not cover NIO, however. Deutsche Bank analyst Edison Yu does. He values ​​the company as a Purchase and has a target price of $ 70 for the shares.

Yu believes that despite supply chain problems, NIO could reach 100,000 deliveries by 2021, although it projects 96,000. It expects monthly production to increase by between 7,500 and about 10,000 in the summer. “In the long run, we see several areas of unexploited growth,” Yu wrote. It plans to sell more NIO models and cars worldwide.

Goldman Sachs analyst Fei Fang is not as bullish as Yu. Fang values ​​NIO Hold shares and is priced at $ 59.

Fang, however, thought the quarter was solid and was encouraged by the success of the battery business model as a service. NIO will sell an EV at no cost to a battery and will basically rent the battery to consumers for a monthly charge.

When the service was launched, the monthly fee was 980 yuan, or about $ 140. The rate includes six battery swaps per month. Considering the variables, that is, approximately up to 1,500 miles of driving distance.

Approximately 55% of new NIO buyers select the rental option and the percentage grows each month, according to management. Fang wrote that the rental model improves the utilization of NIO’s 200 changed battery stations.

Write to Al Root at [email protected]