NIO (NYSE:NIO) stock has dropped roughly 14% over the past week, as fears related to a broader economic slowdown impede bullish sentiment on NIO stock. Just look around: pent-up consumer demand is tapering off and Covid-19 variants are causing sporadic lockdowns globally.
But look at this dip as a favorable buying opportunity.
We’re heading into a “Goldilocks” economic environment that will favor Nio (NYSE:NIO).
What do we mean by this? Well, economic growth will slow down just enough to push bond yields lower and support a larger valuation multiple on NIO stock. But, it won’t be enough to derail consumer spending or upend the unstoppable shift towards electric vehicles. Economic growth won’t slow too much, or too little.
So, over the next 12 months, we expect Nio to benefit greatly from a dual tailwind of strong deliveries and multiple expansion. The former comes on the back of the shift to EVs and low rates, whereas the latter results from lower yields. These both lead to a higher NIO stock price.
The semiconductor shortage caused Nio’s deliveries to fall in both April and May, but with the crisis in remission, Nio’s delivery prospects are bright again. For one, Nio’s June delivery volumes were up 20% month over month.
To add yet another catalyst into the mix, Nio will be expanding into Europe in the second half of 2021. And Europe is just the beginning of their global expansion process.
Bottom Line on NIO Stock
We expect this recent uptrend in delivery volumes to persist. And when it does, it will couple with multiple expansion to power NIO stock higher.
We’re looking at $70 levels by the end of the year. And we aren’t the only ones with this price target.
Nio is but one of my top picks in the Next-Gen Mobility world. Yes, long-term, NIO stock will score investors big returns, but it’s far from the only hypergrowth stock on my radar.
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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.