NIO Stock Forecast: Why Investors Need to Drive Far, Far Away From This EV Play

Stocks to sell

According to my Nio (NYSE:NIO) stock forecast, the long-term outlook isn’t pleasant. EV sales are taking a turn for the worse. The company is battling with steep competition, and a weaker EV market could continue to affect vehicle deliveries and gross margins in FY24. 

As previously noted back in December, Nio stock’s long term growth prospects and path forward remains uncertain. Investors might evaluate their holdings, and consider selling Nio stock before things ugly. 

Nio Stock Forecast: Profitability’s Unlikely

When the going was good and interest rates were low, there was rapid speculation in many of the up-and-coming EV companies. 

This speculation was not just from your average joe and everyday retail investor, but from notable financial institutions. The hopes and dreams ended with the economic downfall. 

Over the last several years, investors have continued to bet on Nio stock becoming the next Tesla. Some tooted their superior build quality, while others tooted their supposed game changing battery swapping technology. 

While these all sound great on paper, it has not led to any material progress in terms of profitability. The company continues to post staggering operating losses, and has no concrete plan towards profitability. 

Even if they’re able to achieve this, it may not be for a few years down the line. Additionally, EV headwinds in 2024 could cause the stock to fall another 40% from current levels.

Competition Should Be a Major Concern for Shareholders

While competition is good for the marketplace, this situation with Nio is much different. 

Nio only has a tiny 2% market share in the Chinese EV market. The company has slowly entered the European market and has strong ambitions of entering the U.S. However, this will be much more difficult than investors think as there are geopolitical risks that could threaten their long-term expansion plans. 

They have barely penetrated the Chinese EV market, and plans to expand internationally will be much more difficult with slower demand for EVs. BYD is eating their lunch right now with 2023 EV vehicle sales up 62% to 3.02 million

BYD is the largest EV maker globally, is already profitable, and continues to steal market share from industry leaders like Tesla. That paints a very horrible picture for Nio, who stands at the bottom of the totem pole.

It’s Time To Move on to Greener Pastures  

The global EV market is already facing enough challenges in 2024, and NIO stock continues to face steep competition. EV demand in China is slowing, taking market share from players like BYD.

Nio continues to lose money, and its path forward looks very uncertain. In fact, it may take years before the company can reach GAAP profitability. 

The margin between Nio and its competitors is getting wider, and they may not be able to catch up. Hope never is a sound investment strategy, and investors should move onto greener pastures. 

On the date of publication, Terel Miles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Terel Miles is a contributing writer at InvestorPlace.com, with more than seven years of experience investing in the financial markets.

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