2022 has been far from a smooth ride for NIO (NYSE: NIO) stock. The Chinese electric vehicle manufacturer grabbed headlines with its monumental 1,100% rise in 2020. Yet since then, it’s struggled to keep up the impressive momentum.

The NIO share price is down nearly 50% this year. Across the last 12 months, the stock has fallen 54%.

So, where will NIO stock go next? Should I be steering clear of it? Or at $17 is this an opportunity for me to grab some cheap shares? Let’s find out.

Latest results

Yesterday saw the release of the firm’s Q2 results. Within the update, there were encouraging signs. Vehicle sales rose by 21% year on year to $1.43bn, and 3.5% compared to Q1. On top of this, total revenue rose by 21.8% compared to Q2 2021 to reach $1.53bn.

Despite this, NIO shareholders will no doubt be focusing on the fall in gross profit. This dropped 14.8% on the year. And compared to Q1, the figure fell 7.4%. What will also be of concern is the firm’s net loss, which widened by a massive 369.6% against a year ago.

2022 struggles

These results paint an accurate picture of NIO’s struggles this year as rising inflation across the globe has pushed up costs. As the business said itself, 2022 has been plagued by “tremendous challenges and cost volatilities.”

NIO has also faced a string of supply chain issues. With China in a continuous battle to eliminate Covid infections, the firm has seen its production halted for stretches.

Despite this, it still predicts it will deliver between 31,000 and 33,000 vehicles in the third quarter, showing it has no plans to slow down.

Electric transition

Even with the above, the biggest issue I see surrounding NIO is the inevitable transition to an electric world, which will have both its benefits and drawbacks.

First, there’s no doubt that governments across the globe will magnify the emphasis placed on the transition to renewable energy. This has already been taking shape. And with the Russia-Ukraine conflict proving it, a reliance solely on conventional energy sources is unsustainable.

For NIO, this is clearly good news. As electric cars become more mainstream, hopefully, the business will see demand for its vehicles increase.

However, this does also alarm me. That’s because I can see a surge in competition in the years ahead as established manufacturers accelerate in the attractive EV market. NIO is expanding in Europe, which should provide the firm with a boost. But how the Chinese firm fares in what’s set to become a saturated market is of concern to me.

Where next?

So, where does the business go from here? And should I be buying NIO stock?

I won’t be buying today. As inflation continues to rise this may further hinder NIO’s operations. And despite it having unique selling points such as its battery-swapping technology, I’m not confident in judging how NIO will stand up against the unavoidable competition. Its share price is low, but right now, it’s not for me.

The post After its latest results, where does NIO stock go next? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

After its incredible 1,100% rise in 2020, NIO (NYSE: NIO) stock has hit the brakes. While 2021 saw a sharp slowdown in growth, 2022 has seen the stock pegged back by 36%. In the last 12 months, it’s down 45%.

This isn’t good news for NIO investors who, following 2020, may have thought the Chinese electric vehicle manufacturer was about to follow in the footsteps of rival Tesla.

However, now trading for above $20, will it be able to stay there and progress further?

The story in 2022

The main reason for NIO’s large fall this year is inflation. Rates have spiked globally. And as a result, many growth stocks have taken a hit. This isn’t uncommon in volatile times like these. And this is because investors look for ‘safer’ alternatives than these riskier equities. To add to this, supply chain issues and China’s zero Covid strategy have also halted production at times this year.

Despite this, the business still posted some strong results in Q1. Deliveries were up 28.5% year on year to 25,768, while vehicle sales rose nearly 25% to $1.5bn. Total revenues also grew by 24.2%. However, gross profit did fall by 6.9%.

Competition

More widely, an important factor regarding NIO stock is the heightened push to an electric world. And I see this taking one of two directions.

Firstly, it’s inevitable that more governments worldwide will expand their emphasis on a transition fuelled by renewable energy. It’s already been seen in the UK with a ban on the sale of petrol and diesel cars from 2030. And I’d expect moves like this to become common worldwide.

For NIO, this is obviously good news. With a larger push comes, hopefully, a rise in demand for its products.

However, it could also spell trouble. As the EV space continues to grow, there will naturally be a rise in competition. More established manufacturers such as Ford have already made bold all-electric commitments. Even higher-end manufacturers such as Porsche have electric vehicles available, while Ferrari has plans for 40% of its sales to be from fully-electric cars by 2030.

While NIO has seen tremendous growth in the past, this could slow as we see more of the competition targeting a slice of the lucrative market.

Despite this, NIO does have tricks up its sleeve that could keep it ahead of the curve. For example, its battery-swapping technology allows users to swap empty batteries for new ones in a matter of minutes. Should it keep producing cutting-edge technology like this, NIO may be able to keep ahead of competitors.

Where next?

So, where will NIO stock go from here?

Well, while it may be able to continue its impressive growth due to its innovative nature, I won’t be buying NIO stock today. As inflation continues to bite, I think it could slip further this year. With competition also looking like it’s going to heat up, this is of further concern for me. I’ll be keeping NIO on my watchlist for now.

The post NIO stock is above $20. Where will it go next? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Tesla (NASDAQ: TSLA) shares have been top performers over the past decade. They’re up a monumental 16,000% over this period. And the electric vehicle manufacturer proved its quality by rising nearly 900% in a Covid-struck 2020.

Despite a 25% rise in the last 12 months, the stock has struggled this year as a combination of factors has seen millions wiped off global markets.

But after gaining some momentum in the last month, rising by over 25%, is Tesla on the road to recovery?

2022 so far

Tesla entered the year trading at $1,200 but has failed to climb above that as rising inflation has seen the growth stock suffer. With inflation rates flirting with the 10% mark in the US and UK, investors have opted to place their money in ‘safer’ value stocks, as opposed to riskier shares such as Tesla. This is not uncommon in volatile times like these. And with the business struggling earlier in the year with supply chain concerns, combined these factors have pushed down the share price.

Despite this, the last month has seen the Tesla share price surge, fuelled mainly by the strong Q2 results the business posted in late July. Total revenue for the period grew 42% year-on-year. And despite supply chain concerns, the firm managed to produce the most vehicles ever in a single month in June.

It wasn’t all good news though, as it did mention a tightening of its margins due to higher inflation and competition for components.

CEO Elon Musk has also been in the headlines this year for his ongoing attempt to take over social media platform Twitter. After initially agreeing to buy the company for $54.20 per share, Musk is now searching for ways to terminate the deal. Any future move he makes would likely impact the Tesla share price.

What I’m doing

So, does the last month’s momentum signal that I should buy Tesla shares?

I’m not too sure. One factor that drives me away is its high valuation. With a price-to-earnings ratio of 107, this shows me the stock is massively overvalued. As a potential investor, this doesn’t sit right with me.

I’m also concerned about competition. Tesla and Musk have continuously adapted and improvised, and that’s led the company to where it is today. However, as the push to an electric world inevitably becomes larger, the pioneer could see its market share dwindle. We’ve already seen many manufacturers successfully enter the space. And with global governments setting ambitious targets for an electric world, this could threaten Tesla.

The business is obviously aware of this. And as a result, has expanded its operations in Europe with a gigafactory in Berlin. It also bolstered its US capabilities with a similar operation in Texas. This will take Tesla’s production to the next level and could potentially assert its dominant market position.

With this said, I won’t be buying the shares today. If there’s a man to navigate a rocky road, it’s Musk. However, I want to see how the rest of this year plays out before purchasing. I’m tempted by Tesla, but I can see its price slipping should these tough conditions we’re facing worsen. I’ll be placing it on my watchlist for now.

The post Tesla shares are up over 25%. Here’s what I’m doing! appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla and Twitter. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Chinese electric vehicle manufacturer NIO (NYSE: NIO) has made a name for itself over the past few years. The business came to prominence in 2020, rising over 1,100% during this period. However, the last 12 months have been more humbling for the stock, as it has plummeted 55%.

The NIO share price dropped as low as $12 in the past year. But with it currently sat at $19, is now the time to buy?

The year so far

One reason NIO has seen a fall is because of red hot inflation. Higher rates have a bad impact on the value of future earnings. And to add to this, growth stocks, a group of which NIO is a prominent member, also take a hit during volatile periods like now. This is because investors shy away from high-risk investments in search of safer places to store their cash.

Spiking inflation also leads to higher interest rates, as central banks look for ways to control the blaze. For a stock like NIO, which borrows heavily to fuel growth, this is also bad news as this debt becomes more expensive.

More specifically, the business has also seen its operations hit by supply chain issues. As China continues to grapple with Covid, NIO has seen its production come to a halt for periods this year. This will more than likely have a negative impact on NIO’s sales figures for 2022.

Wider outlook

While the firm has faced multiple pressures year-to-date, there are other factors to consider.

One of these, which is difficult to ignore when considering buying NIO shares, is its impressive growth. 2021 saw revenues increasing 122% year-on-year. And even in 2022, despite the issues mentioned above, the business has managed to post fairly strong delivery figures. As a potential buyer, this is encouraging.

However, one issue for me is competition.

This doesn’t only apply to NIO, but to all EV manufacturers. And while I believe there are plenty of opportunities within the sector, as this space continues to grow, competition will naturally heat up.

This can be seen through established manufacturer Volkswagen, which has already made headway in the industry. While Ford has also pledged a commitment to be all-electric by the end of the decade.

As governments worldwide make larger pushes towards an electric world, this competition will only become fiercer. As a result, NIO may struggle to maintain its impressive growth. There’s little doubt this would mean its share price suffering.

With this said, NIO may sustain a competitive advantage through its battery-swapping technology. The firm describes it as a “fully-automatic battery swap in just a short coffee break,” as the technology allows users to swap out their empty battery for a fresh one in the space of minutes.

Would I buy?

NIO’s growth is incredibly impressive. And with its cutting-edge technology, it may be able to stay ahead of competitors. However, I won’t be buying the stock today. Increasing competition worries me. And with concerns surrounding the Chinese economy at the moment, I don’t think now is the time to for me to dive in.

I’ll be keeping NIO on my watchlist for now. Should its share price fall in the months ahead, I may be tempted to open a small position.

The post The NIO share price continues to fall. Should I buy? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

2022 has seen the Tesla (NASDAQ: TSLA) share price falling nearly 40%. With ongoing supply chain issues derived from Covid-19, the firm has also seen rising pressure due to spiking inflation.

But despite these headwinds, last week saw the stock rebound by 10%. In fact, over the last month it has witnessed a 16% rise. So, after falling from its 52-week high of over $1,200, can it recover?

Tesla Q2 update

Earlier this month saw the release of Tesla’s Q2 production and delivery update. Within the period, the electric vehicle manufacturer produced over 258,000 vehicles, while it also managed to deliver over 254,000. This equated to a 27% increase year-on-year.

However, Q2 was the first time vehicle deliveries fell quarter-on-quarter in more than two years. The firm pinned this to “ongoing supply chain challenges and factory shutdowns,” as Tesla has struggled with production in recent months due to those Covid-19 restrictions hitting operations in China. Despite this, June 2022 was the highest vehicle-production month in the firm’s history.

Where next for Tesla?

So, where does the EV manufacturer go from here?

The slowing of production from Tesla falls in line with wider market struggles. Both the Nasdaq and S&P 500 have experienced large declines this year. And especially impacted have been growth stocks. This is because upward inflationary pressures tend to have the opposite effect on the price of these stocks. And as a result, the first half of this year has seen them come tumbling down. As investors tend to switch their money to ‘safer’ value stocks in volatile times, Tesla may continue to struggle in the near future.

Another issue I see with Tesla is its high valuation. For me, a price-to-earnings (P/E) ratio of 101 shows the stock is very overvalued. With this said, its P/E has been much higher in the past.

The business may also struggle with rising competition. There’s been a large push for a faster transition to electric vehicles in recent years. For example, in 2020 the UK government announced the sale of new petrol and diesel cars will end by 2030. And as such, I can see competition heating up in the EV space. This can already be seen with rivals such as Ford, which has pledged to be all-electric by 2030. While Tesla currently holds a dominant market position, this may slip in the future.

Despite this, I won’t write off the firm. It has taken massive strides to expand its manufacturing capacity. It recently unveiled its new Giga Texas plant. And at the same time, it has also set out plans to boost European sales with the opening of a gigafactory in Berlin. While this may cost Tesla in the short term, its ambitious expansion plans could help it retain its dominant position further down the road.

What I’m doing

The firm’s expansion should help it thrive in the long run. And its ambition has seen Tesla grow massively in recent times. However, I won’t be buying the shares today. I think macroeconomic pressures could see its price slip further. And with competition heating up, Tesla may see its role as industry leader slide.

The post The Tesla share price is rising. Here’s what I’m doing appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

NIO (NYSE: NIO) stock made a name for itself in 2020. Rising a meteoric 1,400% during this time, since then momentum has slowed. 2022 has seen the share price drop 50%. While the last 12 months have seen over 60% shaved off its share price.

So, does this fall present an opportunity for me? And is it time for me to be adding NIO stock to my portfolio? Let’s take a look.

Why is NIO stock down?

There are multiple reasons why NIO has taken a hit. One of these is the combination of rising inflation along with spiking interest rates. While higher inflation impacts the value of future earnings, rising interest rates make borrowing money and paying off debts more difficult. For a growth stock such as NIO, this spells bad news.

As well as this, the firm has also struggled with supply chain issues. In April the firm announced the suspension of vehicle production due to rising Covid cases in China. While the business was relatively quick to begin production again, I’d expect the suspension to negatively reflect on NIO’s revenues this year.

Is it time to buy?

While NIO is facing some issues, there are still reasons to be bullish on the firm.

For example, it has seen impressive growth over the last few years. In 2021, revenues increased 122% year-on-year. And while it has struggled this year, it clearly still has growth potential. When considering buying shares, growth like this is hard to ignore.

The company also trades on a price-to-sales (P/S) ratio of just 4.84, which looks cheap. For comparison, competitor Tesla currently trades on a P/S ratio of 12.12.

However, a concern for me that I have with all-electric vehicle stocks is competition. As this space continues to expand, NIO may struggle to retain its market position. For example, competitors like Ford have already made headway in the EV sector. And with its pledge to be all-electric by 2030, along with its $1 billion Cologne site transformation, NIO may struggle to keep up with more established businesses. Should this be the case, we would most certainly see a drop in the NIO share price.

Another threat to NIO comes in the form of delisting. With the real threat of the stock being removed from the US exchange due to pressure from within China, I think we could see the share price continue to fall as a result.

So, while NIO offers potential through its strong growth, there are too many concerns for me to deem the stock a buy for my portfolio. I think worsening economic conditions will continue to mean the stock suffers. And as more competitors venture into the EV space, it may see its market share negatively impacted. Although the stock is trading considerably lower than it has in recent years, I won’t be buying shares today.

The post NIO stock is down 50%! Is it time to buy? appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The stock is currently trading for just below $1,000. So, should I be buying shares in the electric vehicle (EV) manufacturer? Let’s explore.

Tesla’s positive Q1

Late last week Tesla released its Q1 results. And there were plenty of positives to take away. Within the period, the firm produced over 305,000 EVs and delivered 310,000, despite ongoing supply chain issues. It also managed to increase revenues by 87% from the same period a year ago, while gross profit increased a substantial 132%. Given the tough economic conditions the firm has faced, such as limited production at the firm’s Shanghai factory, these are impressive results.

What I also like about Tesla is the ambition of Musk. The company anticipates growing its rate of deliveries at 50% for a number of years ahead. And this will be boosted by the recent opening of its gigafactory in Berlin. The factory will aid Tesla’s expansion into Europe and will produce 500,000 vehicles and millions of battery cells every year. If this growth continues, it’s hard to see the share price slowing down any time soon.

Musk also recently promised that Tesla’s robotaxi will be ready by 2024. The vehicle will have no wheels or pedals, and Musk has reiterated the vehicle will be focused on creating the lowest cost-per-mile price. This could provide a huge boost for Tesla’s growth in the near future. However, it must be noted that Musk has failed to deliver on deadlines numerous times, putting the 2024 target in doubt.

Tesla concerns

One major concern for me is competition. While Tesla has shown its resilience over the past few years, as established manufacturers dive deeper into the EV space, this may Tesla’s dominant position in the market. For example, rival Volkswagen has been making headway in EVs. And it poses a large threat to Tesla’s European sales.

Please note, investing in stocks and shares puts your capital at risk, and Tesla’s high valuation is of further concern to me. With a current price-to-earnings (P/E) ratio of 134, it’s easy to see it as overvalued. For context, General Motors has a P/E of 5.95. When looking to buy Tesla shares, this overvaluation is a deterrent for me.

Should I be buying?

Tesla’s latest results show that despite its doubters, it seems to able to continue growing. In a period plagued with supply chain issues, its delivery numbers are also impressive. Further, continuous rising revenue is a tempting factor when considering buying shares.

However, its overvaluation concerns me. And despite its strength in the EV space, I think we could begin to see this undermined in the years ahead as more manufacturers make the inevitable transition into the sector. Yet while I won’t be buying Tesla shares today, they’re most certainly on my watchlist for the near future.

The post Tesla shares have fallen below $1,000! Should I be buying? appeared first on The Twelfth Magpie.

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Charlie Keough has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Arrival (NASDAQ: ARVL) is an electric vehicle manufacturer that primarily produces lightweight commercial vehicles such as buses and vans. It plans to price its EVs the same as its petrol and diesel equivalents. With van production coming soon, I will be assessing whether to buy more shares in this EV growth stock for my portfolio.

Electrifying prospects

Arrival has created a standard electric vehicle platform that allows it to save costs. This is because the platform serves as the foundation for multiple vehicle categories such as buses, vans, and cars. This, paired with the EV manufacturer’s groundbreaking microfactory concept, makes its manufacturing process extremely efficient. Its microfactories have interchangeable cells, allowing for production of different vehicles, and up to 10,000 vans a year. Therefore, production can be executed on scale without the need for building massive factories.

Arrival has already secured orders from several companies such as UPS, LeasePlan, and FirstGroup. Its number of letter of intents (LOI) also saw a monumental increase to approximately 134k vehicles in its latest earnings report. This goes to show that the firm is gaining traction from renowned companies globally with plenty of tailwinds.

UPS and downs

Arrival’s biggest customer by far is UPS, which is also an investor in the business itself. The courier giant placed an order for 10,000 vehicles last year, with an option for a further 10,000. Management disclosed that it expects the start of production on its Arrival vans in Q3 this year. UPS also announced on its earnings call that it’s expecting 400 to 600 vans to be delivered by the end of the year. Nonetheless, the next hurdle the EV firm faces is getting its van certified. It expects this to be completed by Q2.

As a shareholder, I will admit that I am slightly worried. The expected production numbers this year are lacklustre to say the least. With the company continuing to burn cash without any revenue, 400 to 600 vans isn’t going to cut it. Although CFO John Wozniak mentioned that Arrival expects to end the year with $150m in cash, he also reiterated the firm’s intention to raise capital in the near future. This is to allow Arrival to scale production to meet its ever-increasing LOI numbers.

The Arrival share price is already sitting at penny stock levels, so any equity funding would be a waste at this price. As such, the company will most likely have to take on debt, which isn’t ideal in a high interest environment.

Delayed arrival

To add to my worries, Arrival is yet to announce the confirmation of its bus certification. This was expected to be completed by Q1. Additionally, the company has also postponed the release of its full financial results twice. These factors don’t bode well for its reputation. As a result, I am worried that Arrival may not even be able to hit its van production targets. Consequently, due to Arrival’s complacency, I will not be looking to buy more shares in this EV growth stock for my portfolio.

The post Could this EV growth stock be about to explode? appeared first on The Twelfth Magpie.

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• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

John Choong owns shares of Arrival at the time of writing. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

NIO (NYSE: NIO) shares had yet another disappointing day of trading yesterday, closing 11% lower at $17.77. Over the past 30 days, the stock has fallen 26% and year-to-date returns are even bleaker, with the share price falling over 46%.

The primary reason for the drop in NIO shares yesterday was tied to the Hong Kong Stock Exchange. NIO decided to list secondary shares on that exchange to help mitigate the risk of Chinese regulatory pressures. This news was initially met with optimism, as the shares rose by double-digits on March 9, the day before being listed. However, after its debut trading day there, the shares closed 0.7% lower. This poor result seems to have spilled over into the American market, pushing NIO shares down.

I’ve been a holder of the stock for some time, so the recent share price movements have been pretty painful to watch. However, I am still a firm believer that the shares could offer long-term growth. As such, is now a good time for me to load up on more? Or should I steer clear of the Chinese EV powerhouse?

Electric growth

In its February 2022 delivery update, NIO announced it had delivered 6,131 vehicles, up just under 10% year-on-year. In addition to this, total deliveries for 2022 so far are up 23.3% compared to the same period in 2021. This momentous yearly growth is not exclusive to 2022 either. In fact, the firm’s deliveries for 2021 were over 109% higher than in 2020. If NIO can keep delivering stellar figures like these, I think investors will feel more positive about the shares.

Risks for NIO shares

Regardless of the exceptional growth at the firm, there are still a number of headwinds the business needs to overcome before it can be said to be plain sailing. Firstly, the EV industry is becoming extremely competitive. NIO has direct competitors such as Xpeng and Li Auto, which both saw 100%+ sales increases in January.

In addition to this, more established big names such as Ford and General Motors are pouring billions into building all-electric fleets with mass-scale existing manufacturing. For context, BDO reported that the top 20 global carmakers spent a combined £71.7bn on EV R&D from 2019-2020.

Rising interest rates are also a direct threat to NIO shares too. Firstly, high growth stocks are hit hardest when rates rise, due to decreased investor confidence. Secondly, it magnifies debts. NIO currently has almost $6bn of long-term debt on its balance sheet and hence rising rates could pose a big threat to the company.

What I’m doing now

NIO shares suffered due to a disappointing debut trading day on the Hong Kong exchange. However, I won’t be using this dip to add more shares to my portfolio. In my opinion, the current headwinds the firm must face are simply too risky to ignore.

The post Here’s why NIO shares fell 11% yesterday appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Dylan Hood owns shares of NIO Inc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Tesla (NASDAQ: TSLA) shares reached their all-time high of $1,229 in early November 2021. However, since then the electric vehicle (EV) giant’s shares have tumbled almost 32%, currently sitting at $838. What’s more, in 2022 alone the shares are down 30%.

In an uncertain economic environment, do Tesla shares have what it takes to climb back above $1,000 during 2022? And as such, should I be considering adding the shares to my portfolio? Let’s take a closer look.

Reason for November price jump

The main reason why Tesla shares skyrocketed in November was due to a partnership announcement with Hertz. The car rental giant said it would be buying 100,000 Tesla vehicles to add to its fleet throughout 2022, which is expected to equate to a healthy $4.2bn for Tesla. This injection of cash throughout the year should help Tesla deliver more solid results.

In addition to this, in September 2021, the firm’s Model 3 sedan topped total new car sales in Europe, becoming the first fully electric vehicle in history to do so.

Growth in 2022

On 26 January 2022, Tesla released its 2021 Q4 results. Revenues came in at $15.9bn, up 71% year on year. In addition to this, profits rose an astounding 118% compared to Q4 2020, with margins rising over 6% in the process. Tesla is also in a great spot financially, with $17.6bn cash and negligible debts.

Although these results were extremely encouraging, Tesla shares dropped over 10% in the days after their release. This was largely due to wider issues concerning supply problems after Tesla affirmed that its “own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through 2022”. These supply issues are likely to be a threat to Tesla shares climbing back to $1,000.

Why I am not a fan of Tesla shares

It’s no secret that the Tesla share price is high and heavily overvalued, especially when considering its fundamentals. Tesla shares currently trade on a price-to-earnings (P/E) ratio of 171. For context, good value stocks usually trade on P/E ratios of under 10.

With such a high valuation comes volatility. As my fellow Fool, Cliff D’Arcy mentioned, between March 13 and March 20 back in 2020, the stock moved by over 12% every day, primarily due to high volume options trading. I’d be lying if I said this volatility didn’t worry me.

In addition to this, rising global interest rates are placing big pressure on growth stocks. When rates rise, people turn away from riskier investments, and hence valuations drop. For context, the S&P 500 Growth, a high-growth index, has dropped almost 15% in 2022. With Tesla’s high valuation and volatile price movements, I think interest rates pose a real threat to the shares.

Overall, I am sceptical about whether Tesla shares will be able to climb back above $1,000, especially considering supply chain shortages and the threat of rising interest rates. Although the firm continues to see great results, I think those broader factors outweigh any positives. Therefore, I won’t be adding any Tesla shares to my portfolio today.

The post Will Tesla shares climb back above $1,000 in 2022? appeared first on The Twelfth Magpie.

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Dylan Hood has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.