Is it Time to Snap Up NIO Stock While it's Still Trading Cheap?

NIO Inc. NIO, once hailed as the “Tesla of China,” is now trading at just around $4 per share, down roughly 94% from its all-time high attained in 2021 and even below its 2018 IPO price of $6.26. For a company that once captured investor imagination with bold electric vehicle (EV) ambitions, the fall has been steep.In 2018, NIO's debut on the NYSE was met with considerable excitement. Fast forward to 2025, and the company is operating at a much larger scale with a wider vehicle lineup, new brand launches, and long-term plans still intact. Yet, the stock remains under pressure.So far in 2025, NIO shares have slipped nearly 8%. Meanwhile, domestic peers Li Auto LI and XPeng XPEV have surged 19% and 74%, respectively. XPeng, in particular, has gained traction thanks to its aggressive push into autonomous driving and robotics.YTD Price Performance Comparison Image Source: Zacks Investment ResearchFrom a valuation perspective, NIO currently trades at a forward price-to-sales ratio of 0.54, well below Li Auto’s 1.1 and XPeng’s 1.53. The market seems to be pricing in more risk for NIO despite its growth initiatives. That brings up a key question: Is the current discount an opportunity or a value trap?NIO P/S Vs. LI & XPEV Image Source: Zacks Investment ResearchLet’s delve into NIO’s growth drivers and challenges to evaluate if investors should park their cash in the stock at this time.Product Portfolio Expansion to Boost NIO DeliveriesNIO's vehicle lineup includes ES6, ET5T, ES8, EC6, ES7, ET5, ET7, EP9, EVE, ET9 and EC7 models. In late March 2025, the company commenced delivery of the NIO ET9. But it’s not just the namesake brand driving growth anymore. To tap into different segments of the EV market, NIO has launched two sub-brands: ONVO, targeting the mainstream market, and Firefly, aimed at smaller premium EVs.ONVO’s first model, the L60, has already hit the market and is seeing a positive response. The brand’s second model, the L90, is scheduled for delivery in the third quarter of 2025, followed by the launch of a third ONVO vehicle in the fourth quarter. Firefly’s first model commenced deliveries last month.In April 2025, NIO delivered 23,900 vehicles, up 53% year over year. This included 19,269 units from the main NIO brand, 4,400 ONVO units and 231 Firefly vehicles. While the growth is encouraging, it still lags behind peers. Li Auto delivered 33,939 units last month, while XPeng saw 273% growth with 35,045 units.NIO expects to double its deliveries in 2025, driven by fresh models and expanded brand reach.NIO’s Battery Swap Tech & Improving Vehicle MarginsOne of NIO’s standout innovations is its battery swap technology, allowing users to swap batteries in minutes instead of waiting to charge. With over 3,200 swap stations in place and a new partnership with CATL to build the world’s largest battery swap network, NIO is doubling down on this unique selling point.On the margin front, things are moving in the right direction. Thanks to component cost reductions and better scale, vehicle margins have improved — from 9.2% in first-quarter 2024, to 12.2% in the second quarter to 13.1% in the third quarter and the fourth quarter each. For 2025, the company is targeting a vehicle margin of 20% for the NIO brand.NIO’s Breakeven Goals: Ambitious but UncertainDespite these operational improvements, NIO remains deep in the red. The company posted a net loss of more than $3 billion in 2024. Management expects these losses to narrow this year and has set an ambitious target to break even by the fourth quarter of 2025.Achieving breakeven would mark a major turnaround—but it won’t be easy. China’s EV market is highly competitive, with price wars putting pressure on all players. For NIO, hitting profitability amid these dynamics is still a big “if.”There are also cost issues. In the last quarter of 2024, SG&A expenses jumped 22.8% year over year due to rising headcount and more aggressive sales efforts. This trend is expected to continue, potentially weighing on margins.On top of that, financial constraints are tightening. NIO’s long-term debt-to-capital ratio stands at 0.76, well above the industry average of 0.27. And its cash reserves fell sharply, from RMB 32.9 billion in December 2023 to just RMB 19.4 billion a year later. This raises concerns around potential fundraising and possible shareholder dilution.Don’t Rush to Buy NIO NowNIO’s growth story is still alive. Its push into new market segments with ONVO and Firefly, rising vehicle margins, and expanding battery swap network are all promising signs. If management can deliver on its breakeven target and scale up production efficiently, the stock could rebound over the long term. The Wall Street average target price for NIO indicates a 17% upside from the current levels. Image Source: Zacks Investment ResearchBut right now, uncertainty around profitability, competitive pressure and a shrinking cash cushion make the stock a risky bet for new investors. For existing shareholders, holding on may still make sense given the long-term potential. But for those considering a fresh position, it might be wise to wait for stronger financial signals and execution milestones.NIO currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report NIO Inc. (NIO): Free Stock Analysis Report Li Auto Inc. Sponsored ADR (LI): Free Stock Analysis Report XPeng Inc. Sponsored ADR (XPEV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks