Nio (NYSE:NIO) saw a decline in stock price over the last several months. Due to the Chinese regulatory pressures and fears surrounding possible delisting, things are now looking good for NIO stock for the first time in a long time.
China’s economy has hurt a lot since China implemented its “zero-COVID” policy. The tightening of the policy has led to many factory closings. However, there are reports the Chinese government is looking to ease restrictions to jumpstart the economy.
In the meantime, China has been offering incentives to help the economy and electric vehicles. The government is encouraging consumers to move away from gas-powered vehicles in favor of electric ones with new, cheaper models coming out soon.
The Chinese government is offering $1,500 to help people switch from gas-powered cars to electric ones. They hope this will reduce greenhouse gas emissions and save everyone a lot of money.
That is great news for companies like NIO, which holds a significant stake in the Chinese EV industry. China is the world’s largest EV market, and some of the biggest companies in China, including Tesla (NASDAQ:TSLA) and Tencent Holdings (OTCMKTS:TCEHY), are already making a huge bet on EVs. However, few companies are as enticing and progressive as Nio when it comes to the EV market. Nio is a Chinese manufacturer of electric vehicles. Founded in 2014, Nio has made headway into the market and has plenty of plans for the future. This year will be a great one for the company.
Why Is Nio Stock a Buy?
China led EV sales in 2021. According to the International Energy Agency (IEA), total sales figure more than doubled from the prior year. However, many uncertainties remain in the industry as battery supply chains and EV production capacity remain a cause for concern.
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Under these circumstances, to strengthen your portfolio, you should look for any companies underperforming in recent months and then check its past performance across every metric.
In early May, the Securities and Exchange Commission announced that Nio was being added to an existing list of financial firms. They would face delisting unless they allowed for audit oversight, which these companies have not yet done.
However, there is good news; China has finally agreed to give access to U.S. regulators. This will provide much-needed transparency and allow U.S. investors to put more money into Chinese companies’ shares while still highly undervalued.
Bank of America analyst Ming Hsun Lee upgraded the stock to “buy” on May 16, seeing that the bad news is priced in.
NIO’s electric SUVs are growing in popularity, and the company is expanding its lineup with three new models in 2022. The company has used its NT2.0 platform to make sure that these cars will meet many people’s needs.
Plus, Nio has gone from selling just EVs in China to expanding internationally. It already sells them in Norway and aims to be sold in 25 countries by 2025.
Do Not Heed the Bearish Sentiment on Nio Stock
China is the largest EV market in the world. China’s shift to electric vehicles (EVs) has been a catalyst for firms such as NIO, which manufactures EVs and develops mobility solutions for major cities.
Nevertheless, Nio has been suffering in recent months due to the wider market. But the company is looking to grow revenues aggressively this year, bucking the bearish sentiment and opening up new avenues of growth and prosperity.
On the publication date, Faizan Farooque 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.
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