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Nio Soared Thanks to Big News Today — Is the Stock a Buy?

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Nio (NYSE: NIO) stock surged Tuesday. The Chinese electric vehicle (EV) specialist’s share price ended the daily session up 10.8%, according to data from S&P Global Market Intelligence.

On Dec. 23, the company revealed its ET9 ultra-luxury sedan at its Nio Day event. The company also took the wraps off its new, 5-nanometer (5nm) chip for autonomous driving. The U.S. market was closed for the Christmas holiday on Monday, but investors are showing their excitement for the new luxury vehicle and semiconductor technology today.

Nio’s pipeline has investors feeling bullish

Starting at more than $112,000, Nio’s ET9 sedan is poised to be the company’s most expensive release to date. The EV will include a super-fast-charging battery pack and other high-end features, and represents a big push into the upper premium vehicle market. Deliveries for the ET9 are expected to begin in the first quarter of 2025.

The ET9 will also make use of Nio’s first internally developed chip for partially autonomous driving. The Chinese company says that its 5nm chip for self-driving tech will be able to match the combined performance from four of Nvidia’s industry-leading DRIVE Orin processors for autonomous navigation.

Is Nio stock a buy right now?

Despite the share price pop today, Nio stock is still down roughly 87% from its lifetime high. The EV specialist is now valued at less than 2.2 times the average analyst estimate for 2023 revenue — a level that could be considered quite cheap given that the business is posting solid sales performance and has room for expansion in the Chinese market and internationally. On the other hand, it remains to be seen whether the business can deliver consistent profits.

NIO PS Ratio (Forward) Chart

NIO PS Ratio (Forward) Chart

Nio is a stock that could go on to deliver explosive gains for risk-tolerant investors, but it’s also a potentially volatile play. In addition to uncertainty on the profitability front, the company’s share price trajectory will likely continue to be shaped by the broader macroeconomic picture in China.

If you’re willing to take on risk in pursuit of scoring big wins in the EV space, the stock could become a big winner. But you should weigh your tolerance for volatility before going all in on Nio.

Should you invest $1,000 in Nio right now?

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nio. The Motley Fool has a disclosure policy.

Nio Soared Thanks to Big News Today — Is the Stock a Buy? was originally published by The Motley Fool

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