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On Wednesday, Barclays (LON:BARC) analysts reduced the price target for NIO stock (NYSE: NIO) to $3.00 from $4.00, maintaining an Underweight rating. The decision follows NIO’s first-quarter revenue being 5% below estimates and missing guidance. This shortfall was attributed to lower average selling prices due to increased promotions for older models and a shift in product mix toward the ONVO brand. While the stock has declined over 32% in the past year, InvestingPro analysis suggests the stock may be undervalued at current levels.
NIO’s vehicle gross margin fell to 10%, with adjusted operating and net margins widening to around -50%. According to InvestingPro data, the company’s net loss reached $3.35 billion in the last twelve months, with negative free cash flow of $2.34 billion. These figures remain far from the company’s target of breaking even by the fourth quarter of 2025. Despite these challenges, NIO has implemented cost-efficiency measures since March, including reorganization and cross-brand integration. For deeper insights into NIO’s financial health and future prospects, subscribers can access the comprehensive Pro Research Report, featuring expert analysis and actionable intelligence. Research and development resources across its three brands have been merged, and sales for ONVO and NIO brands are now managed together, although their stores remain separate.
The company expects improved operating efficiency starting in the second quarter. However, achieving its full-year delivery guidance and fourth-quarter breakeven target remains challenging. NIO and ONVO brands are each targeting 25,000 monthly units by the fourth quarter, with NIO recently launching refreshed models in late May.
NIO’s ONVO brand saw its L60 model ramp up to 6,300 units in May, with a target of 10,000 units per month. The brand plans to launch and deliver the L90 SUV in the third quarter and the L80 in the fourth quarter, aiming for a substantial increase in sales. Despite these efforts, Barclays analysts noted that achieving the 50,000 monthly units target by year-end is challenging amid intensifying competition in China.
In other recent news, NIO Inc (NYSE:NIO). reported its first-quarter 2025 financial results, revealing a total revenue of RMB 12 billion, which marks a 21-22% increase year-over-year but a 39% decrease quarter-over-quarter. The company’s revenue fell short of the expected range of RMB 12.4-12.9 billion, and the gross profit margin of 7.6% was below various analyst estimates. NIO’s cash balance dropped significantly to RMB 26 billion from RMB 42 billion in the previous quarter, raising concerns about cash burn among analysts. Despite this, the company has set a revenue guidance of RMB 19.5-20.1 billion for the second quarter, suggesting a substantial increase quarter-over-quarter.
Analysts from Macquarie, BofA Securities, and Mizuho (NYSE:MFG) have all lowered their price targets for NIO, citing increased competition and financial challenges. Macquarie reduced its target to $3.90, BofA to $4.30, and Mizuho to $3.50, while Morgan Stanley (NYSE:MS) maintained an Overweight rating with a price target of $5.90. NIO aims to achieve a monthly production volume of 50,000 units and profitability by the end of 2025, with guidance for second-quarter vehicle deliveries ranging from 72,000 to 75,000 units. The company is also focusing on improving its gross margins with the launch of new models, targeting a 15% vehicle margin in 2025. These developments highlight the challenges and strategic goals NIO faces in the competitive electric vehicle market.
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