Should You Buy Nio Stock While It's Below Its IPO Price?

Core Viewpoint - Nio, a Chinese electric vehicle manufacturer, is currently trading below its IPO price, presenting a potential contrarian investment opportunity despite recent struggles in production and profitability [1][2]. Company Performance - Nio's stock peaked at $62.84 in February 2021 but has since fallen to below $5, reflecting challenges in scaling production and maintaining pricing power [1][2]. - The company experienced significant growth in annual deliveries from 2018 to 2021, with increases of 81% in 2019, 113% in 2020, and 109% in 2021, reaching 91,429 vehicles [2]. - However, annual deliveries slowed to a 34% increase in 2022 and a 31% increase in 2023, totaling 160,038 vehicles, attributed to supply chain issues and a competitive price war [3]. Recent Developments - In the first 10 months of 2024, Nio's deliveries grew by 35% year over year, reaching 170,257 vehicles, driven by strong sales of premium ET-series sedans and the launch of the Onvo smart vehicles [4]. - Analysts project Nio's revenue to increase by 26% to 70.3 billion yuan ($9.7 billion) for the full year, with a narrowing net loss from 21.15 billion yuan to 19 billion yuan ($2.6 billion) [5]. Future Outlook - Nio anticipates growth from steady demand for its premium vehicles and the introduction of new models, including the Onvo L60 to compete with Tesla's Model Y [6]. - The company plans to expand in Europe despite facing higher tariffs and has received a $3 billion investment from Abu Dhabi's sovereign wealth fund to support its growth in the UAE and the Middle East [7]. Financial Position - Nio held 41.6 billion yuan ($5.7 billion) in cash and equivalents at the end of Q2, but its high debt-to-equity ratio of 4.9 may hinder future fundraising efforts [8]. - The company's enterprise value is 67.3 billion yuan ($9.3 billion), making it appear undervalued at less than 1 times this year's sales compared to Tesla's 10 times [9]. Competitive Landscape - While Nio is unlikely to match Tesla's scale, which delivered 1.81 million vehicles in 2023, a resurgence in growth could significantly increase Nio's stock value [10].