NIO (NYSE: NIO) stock fell over 2% in the early trading hours Wednesday, as investors reacted to a bearish note from an investment bank indicating potential further downside for the company’s share price.
Barclays, the investment bank, recently delivered a somber outlook for NIO, the Chinese EV company. The bank forecasted further downside for the company’s stock amidst concerns over sales performance and heightened competition in the EV market.
Moreover, Barclays has downgraded NIO (NYSE: NIO) to Underweight from Equal Weight and lowered the price target to $4 from $5 per share.
The sobering outlook from Barclays comes soon after NIO released its delivery report for the first quarter. The company delivered 11,866 vehicles in March, a 45.9% jump from the month before. However, the first-quarter sales of 30,053 units fell short of the anticipated range of 31,000 to 33,000, raising red flags for analysts.
Barclays Take on Q1 Delivery Report
In a note released this week, Barclays cautioned that NIO’s full-year consensus estimates are “at significant risk,” citing weaker-than-expected March sales and challenges in selling its 2024 models.
Barclays said,
“With weaker than expected deliveries in March, NIO’s Q1 deliveries came in in line with revised guidance of 30k provided on March 27 but below its original guidance (31k-33k) provided on March 5.”
The firm added,
“Importantly, the miss reflects weaker sales momentum of the new 2024 models, which were just launched in early March. With limited new product launches in the pipeline planned for the rest of 2024, we see significant risks for NIO’s ability to meet consensus estimates for the reminder of the year.”
Barclays forecasts the already hyper-competitive electric vehicle market in China will intensify further over the long run.
Barclays points out that NIO is competing in the segment of high-end SUVs and sedans. Huawei recently entered this market with a top-selling SUV and plans to launch a second model soon. Meanwhile, BYD’s premium brand, Danza, is persistently enhancing its existing models and unveiling new ones.
They also emphasize that Xiaomi (OTC: XIACF) made its market debut over the past weekend, introducing some “highly competitive EV sedan models.”
Barclays underscored that the entry of these strong and much larger competitors has intensified the competition for NIO. The firm is concerned that NIO may not possess the adequate scale and resources to compete in this heated market race.
NIO (NYSE: NIO) Stock Movement
NIO stock dropped 2.16% to $4.46 in the early trading hours of Wednesday. The traders have exchanged hands with 13,040,551 (13.04 million) shares compared to the average daily trading volume of 57.47 million.
