NIO’s stock is in crater because Manchin’s move means more than a new model


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An NIO eC6 car is on display at the 19th Shanghai International Automobile Industry Exhibition in Shanghai in April.

Hector Retamal / AFP / Getty Images

Chinese electric vehicle maker listed in the United States


NIO

The launch of a new electric vehicle model on Saturday wowed Wall Street, but you wouldn’t know from the share price. Investors have another problem in mind.

NIO (ticker: NIO) offers a mid-size luxury sedan called the ET5 that starts as low as $ 40,000 if buyers take the so-called battery subscription option. This allows car buyers to essentially withdraw $ 10,000 from the purchase price, in exchange for a monthly fee. It’s a bit like paying for gasoline in a traditional car.

The new model is expected to hit the roads in 2022, marking a quick turnaround for the new model being announced on sale. NIO also announced on Saturday that its ET7 sedan will start shipping in March 2022.

Based on Monday’s stock performance, investors might assume they were disappointed. Shares were down around 6.7% to $ 27.99 on Monday morning, while the


S&P 500

and


Dow Jones Industrial Average

declined by about 1.9% and 1.8%, respectively.

The real factor behind the move is Senator Joe Manchin’s decision, which he revealed on Sunday, not to support President Joe Biden’s Build Back Better bill, derailing hopes of its passage. This legislation includes purchase tax credits that would have benefited all electric vehicle manufacturers.

NIO, which focuses on China, doesn’t sell to the United States, so a tax credit for buyers from that country wouldn’t help much. But the entire electric vehicle sector was hammered on Monday. And the valuations of all VE stocks listed in the US are very large relative to each other.


You’re here

(TSLA) was down about 3.9% and


Lucid

Shares (LCID) fell 5.9% in response to the Manchin news.

Wall Street actually liked what they heard from NIO. Morgan Stanley analyst Tim Hsiao was encouraged by what he heard on Saturday, calling the event a success in a research report. He values ​​Buy stocks and has a target price of $ 66 for the stock. Bank of America analyst Ming Hsun Lee also notes NIO at Buy, with a price target of $ 65.

Lee wrote on Monday that the ET5’s specs stand out from their peers. The ET5 will have up to 500 horsepower, over 600 miles of range per charge, and will feature advanced driver assistance features running on a computer powered by


Nvidia

(NVDA).

Citigroup analyst Jeff Chung noted in a report released on Sunday that advanced driver assistance features will be available with a monthly subscription of around $ 100. Many automakers attempt to generate subscription sales by offering features that can be upgraded with over-the-air software updates. NAD fits this description.

Chung is also pricing the stocks at Buy. His target for the price is $ 87.

It’s hard to find a bearish analyst covering NIO stock. About 84% of analysts who follow the company rate stocks on buy, while the average buy rating ratio for stocks in the


S&P 500

is about 55%. The average price target among analysts is nearly $ 60 per share, up more than 100% from recent levels.

Write to Al Root at [email protected]


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