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Here are two beaten-down growth stocks I like the look of today

Dylan Hood — Tue, 30 Aug 2022 06:44:00 +0000

2022 has been a year characterised by surging inflation. Caused by supply bottlenecks from Covid-19, ultra-low interest rates, and magnified by the Russia-Ukraine crisis, inflation reached 10.1% in the UK in July. Across the Atlantic, the situation was similar, with prices rising 8.7% year on year in July.

With inflation rising, central banks are hiking interest rates. This is placing big pressure on growth stock valuations, as people pull their money out of speculative assets. At historically low prices, I’m looking for bargain growth stocks that could land me some big returns in the future. Below are two stocks I currently have my eye on.

NIO

NIO (NYSE: NIO) is a Chinese electric vehicle manufacturer. It had a standout year in 2020, when its shares climbed over 1,100%. However in 2022, things haven’t been as easy with the shares falling 40% year-to-date. Over 12 months, the shares are down 47%.

The reason I like the look of this stock is due to its remarkable results. In Q1, the firm saw its year-on-year deliveries rising by 29%, with revenues climbing by 24%. Although NIO is still loss-making, its losses shrank 10% compared with the previous quarter, which is a good sign. In 2021, revenues soared by over 122%!

NIO also boasts some market-leading tech when it comes to battery charging. Its cars feature unique battery swapping technology that can be applied in a matter of minutes. Being the only manufacturer to offer this service, I think the stock is well poised to capture market share.

Rolls-Royce

Rolls-Royce (LSE: RR) is a UK-based civil engineering and defence company. It was hit hard by the pandemic in March 2020 and recorded a hefty £4bn loss for that year. However, recently the firm reported a profit for the first time since then, signalling a strong recovery so far in 2022.

Rolls makes the majority of its money from servicing aeroplane engines. With global travel increasing, I think Rolls could be in a great spot for growth this year. In 2020, just 1.8bn travellers boarded planes. Fast forward to 2022, and it’s predicted that 3.5bn customers will board flights. This should help boost revenues so the group can keep delivering profits.

Rolls is also leading the stride in small-to-medium-sized nuclear reactor technology. It expects to receive clearance to roll out these reactors by 2024 and has already signed contracts with governments around the world to implement them.

The caveat

I think that both of these companies exhibit some great fundamentals. However, no matter how these firms perform over the coming year, rising inflation could continue to plague their stock prices. If this is the case, then they could fall even lower – regardless of their encouraging results. However, adopting a long-term view, I think these stocks could be great additions to my portfolio at their current prices.

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Dylan Hood 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.

NIO shares are falling: is it time to buy at $19?

Dylan Hood — Mon, 22 Aug 2022 08:41:16 +0000

NIO (NYSE: NIO) seems to have been fighting an uphill battle so far in 2022. Supply disruptions, Chinese regulators, and Covid-19 restrictions have plagued the automobile manufacturer and as a consequence, its shares have fallen over 43% this year. Over the last 12 months, the shares have fallen an even greater 48%. So, currently sitting at $19, is now the time for me to add this Chinese EV stock to my portfolio? Or should I steer clear? Let’s investigate.

The lowdown

A major driver behind NIO’s poor share price performance has been the state of the macroeconomy. Inflation has been soaring across the globe, caused by a combination of Covid-19-related supply bottlenecks and soaring energy prices stemming from the tragic Russia-Ukraine conflict. Central banks across the globe have been hiking interest rates in an effort to curb this red-hot inflation. When rates rise, it weighs on growth stock valuations as investors shy away from speculative assets and pour money into safe ones. Evidently, this has been bad news for NIO.

Another threat the company has been battling is supply issues caused by a series of lockdowns in Shanghai. The lockdowns forced NIO — along with other Chinese-based EV companies like Li Auto and Xpeng — to slow down or even halt production. This resulted in a series of disappointing monthly delivery figures that seemed to have tipped investors’ sentiment away from the stock.

The firm has also been facing domestic pressure from Chinese regulators. The Chinese government aimed to curb the power of US-listed Chinese companies, and NIO has faced delisting fears as a consequence. The EV giant has undertaken secondary listings in Hong Kong and Singapore to mitigate this risk, but the threat has put serious pressure on the share price in recent months.

Electric results

In the company’s Q1 2022 results, it outlined some encouraging metrics. Year-on-year deliveries rose by 29%, with revenues climbing 24% to $1.5bn. In addition to this, the firm’s losses shrank 10% compared to the fourth quarter of 2021. This highlights the encouraging move towards profitability. In its full-year results for 2021, NIO outlined it had increased its sales by 118%, with revenues climbing a staggering 122% compared to the year prior. If it can continue this trajectory in 2022, then I think it could have a rosy stock exchange future.

A product-specific standout that entices me to buy the stock is its unique battery switching technology. Users can swap out their battery within minutes, making it super convenient. At present, NIO is the only manufacturer offering this service in the EV market. This edge could help the firm keep its market share in the extremely competitive industry.

The verdict

NIO has experienced astronomic growth in the last few years and has some market-leading tech behind it. However, for me, the macro-outlook is just too risky to invest in growth stocks at the moment. In addition to this, the supply issues and Chinese regulatory threats could continue to plague the firm. As such, I won’t be buying any shares at $19.

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Is NIO stock a buy at $20?

Dylan Hood — Mon, 08 Aug 2022 08:27:07 +0000

NIO (NYSE: NIO) has been an interesting stock to follow so far in 2022. Throughout 2020, it rose over 1,100%, but this momentum seemed to dissipate throughout 2021. Moving into 2022 and the stock has been pretty volatile. After reaching a low of just $12 in May, the stock has since charged back up over $20. Regardless of the recent positive movement, year-to-date returns are still pretty disappointing, with it down 40% this year. Over a 12-month span, the case is similar, with it falling 54%.

So, currently at the $20 mark, is now the time for me to buy this Chinese EV stock? Or should I steer clear? Let’s investigate.

Global economy

One risk I see for NIO moving forward is the state of the global economy. Inflation has been climbing at an astonishing rate so far in 2022 and shows no sign of slowing down. Caused by a combination of Covid-19-related supply chain issues, fiscal stimulus, and the Russia-Ukraine war, US inflation reached 9.1% in June. The outlook for the rest of 2022 is that this figure will continue to rise.

Inflation erodes the future value of a company’s earnings, which is bad news for a firm like NIO that’s yet to turn a profit. In addition to this, central banks tend to raise interest rates when inflation rises as a way of slowing down economic growth. On Wednesday last week, the US Federal Reserve announced it was raising the bank rate to 2.5%. As rates rise, people can earn higher interest on safer assets, and hence they turn away from riskier growth stocks like NIO. Continued rising rates could pose a threat to the NIO share price.

Encouraging results

However, when looking at the firm’s growth, I see some exciting stuff. In its Q1 2022 results, it outlined a 29% increase in year-on-year car deliveries. Revenues increased by a similar amount, reaching $1.5bn. NIO’s growth in 2021 was even crazier. Vehicle sales rose 118% and revenue rose a whopping 122% compared to 2020. If it can keep up this high level of growth, I think the stock will inevitably rise in the future.

Another edge that NIO has over its competition is its advanced battery-changing technology. The tech allows users to swap out their old battery within minutes at its own charging stations. No other competitor in the EV space currently offers this service, which could help it retain its market share.

The time to buy?

No doubt, the growth of NIO has been very impressive to watch. Its innovative tech also gives the firm an edge in a fiercely competitive market. However, I think that rising interest rates and inflation could continue to place a lid on the growth of the stock. Unfortunately, this is out of the company’s control and is the case for other growth stocks too. Therefore, I won’t be buying any shares at $20.

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Is NIO stock about to explode?

Dylan Hood — Mon, 11 Jul 2022 11:46:29 +0000

Since mid-April, NIO (NYSE: NIO) stock has been on a rampage. After reaching a yearly low of $12, the stock has climbed 77%, currently sitting at $22. While this still marks a disappointing year-to-date drop of 32%, things seem like they could be on the up for the Chinese EV manufacturer.

Expanding the time horizon to 12 months, NIO shares are down an equally disappointing 51%. However, I think this could offer me the chance to grab some cheap shares for long-term growth. I’ll explain why below.

The story so far

In 2020, NIO stock exploded in value, along with many other growth stocks. However, this momentum stalled at the start of 2021. And throughout the first six months of 2022, rising inflation and interest rates have weighed down on NIO shares. Rising interest rates put pressure on growth stock valuations, as people can earn higher risk-free returns on safe assets.

Looking to the future, it seems that rates will continue to rise throughout 2022 and beyond. In fact, investment bank Goldman Sachs has indicated it expects another five rate hikes in the US throughout the remainder of 2022. If this is the case, NIO stock could struggle to maintain its momentum.

Another reason why NIO shares have struggled (and could continue to do so) is the Chinese regulatory authorities. The Chinese government has been imposing tariffs on Chinese companies listed in the US, in an effort to curb their power. This has sparked delisting fears for NIO, which has prompted it to undertake secondary listings in Hong Kong and Singapore to mitigate the risk.

However, it seems that the worst of these regulatory threats are in the past, and Beijing is doing all it can to encourage Chinese EV firms. It recently announced it would be extending subsidies for customers who buy domestically made electric vehicles. This announcement, made on Friday, pushed NIO shares 8% higher.

Is now the time to buy?

I find it hard not to notice NIO’s consistently high growth, which increases nearly every month. For example, in June, it delivered 12,961 vehicles, a 14.4% year-on-year increase. For the three months, ending June, deliveries rose by over 14% compared to the year before.

NIO also boasts some market-leading technology. Its new ET7 sedan has a range of 1000km, which far outshines EV world leader Tesla. Also, it has a unique battery swap system, which allows batteries to be swapped in just a few minutes at its own charging stations.

The verdict

I think the stock could be a great addition to my portfolio at the current price. Yes, there are prevalent macroeconomic risks that could hold back its growth, however, I think that in the long run, its unique tech and high growth will counteract this risk. Therefore, I think that over the next few years, NIO stock could ‘explode’ in value, and I would be happy to add it to my portfolio at the current price.

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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.

NIO stock is rising: should I buy now?

Dylan Hood — Mon, 20 Jun 2022 08:36:00 +0000

NIO (NYSE: NIO) stock popped last week, rising over 29%. The primary reason for this was the unveiling of its new ES7 EV SUV. While this is good news, the shares are still down 37% year-to-date, and 54% over the past 12 months.

So, with NIO back on the rise is now the time for me to buy some shares for my portfolio? Or should I steer clear of the Chinese EV powerhouse? Let’s investigate.

Why NIO stock is up

As mentioned, the primary reason for the shares rising was the announcement of the launch of its new SUV. It includes the latest autonomous driving technology from NIO and is the fastest SUV the company has ever produced, with a zero to 60 mph acceleration of just under four seconds. It also features the firm’s new battery swapping service. Investors reacted positively to the product’s unveiling, pushing the shares up over 16% after the announcement.

Just 11 days ago on 9 June, NIO released its 2022 Q1 results. Vehicle sales were up 24% year-on-year, with revenues rising by the same percentage. Losses also fell compared to the previous quarter, an encouraging move closer to profitability. However, NIO stock actually slumped on the announcement of this news, as vehicle margins shrank. CEO William Li attributed this fall in margins to “volatilities of supply chain and the challenges in vehicle delivery resulting from the recent Covid-19 resurgence”.

Not out of the woods yet

Although US-listed NIO shares are on the rise, there are still some risks ahead for the firm. Firstly, rising inflation could pose a big threat. It reached a 50-year high in May, hitting 8.6%. The way the US Federal Reserve is tackling these rising prices is by raising interest rates. On Wednesday, the Fed announced that it was hiking rates to a range of 1.5% to 1.75% in an effort to slow economic growth.

This is bad news for NIO as high interest rates tend to encourage investors to sell out of high-risk assets like growth stocks. This is because they can achieve higher risk-free returns. In addition to this, it has over $20bn in debt on its balance sheet, which could be magnified as rates increase. The stock fell 4.6% on the news, with the S&P 500 falling a slightly smaller 4%.

NIO also faces threats from Chinese regulators. The Chinese government has been placing tariffs on some of its largest companies since late 2020 in an effort to limit their power. This has resulted in the stock facing delisting concerns in the US. It has undertaken secondary listings in Hong Kong and Singapore to counter this issue, but it remains a threat.

The verdict

Overall, I think the positive reaction to the product unveiling will provide only a temporary boost for the shares. As inflation and interest continue to rise across the world, I think NIO stock could fall. Therefore, I won’t be buying right now.

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Why the NIO share price is down 46% in 2022

Charlie Carman — Thu, 21 Apr 2022 09:49:12 +0000

It’s been a brutal year so far for NIO (NYSE: NIO) shareholders. After starting the year at $33.52, the NIO share price has fallen 46% to $18.15 today. Although up 83% over five years, the Chinese electric vehicle (EV) stock has surrendered the bulk of its pandemic gains.

Let’s explore the factors driving NIO stock’s decline in 2022 and whether the current share price is a good bargain for me.

Crashing Chinese stocks

First, the big picture. Since the end of 2020, the Chinese government has pursued an anti-monopoly campaign, hammering the share prices of Chinese stocks in the process. The Hang Seng index has tumbled more than 33% since its February 2021 peak. Overseas listings, such as NIO and Alibaba, haven’t escaped the pain. Both stocks have been in a downtrend for over a year and several US hedge funds have dumped them, spooked by the political risks.

Nonetheless, NIO stock remains popular with retail traders and last month Cathie Wood added shares in the EV maker to ARK Autonomous Technology & Robotics ETF for the first time. Does this mean better days lie ahead? Not so fast…

Although Beijing recently signalled an end to the regulatory crackdown, the NIO share price faces further headwinds from China’s ‘zero-Covid’ strategy. All NIO factories are located in Shanghai, which is currently in a draconian lockdown. Hit by severe disruptions to its supply chain, NIO announced this month that it was suspending production.

Yesterday marked the beginning of a cautious easing of current restrictions. Nevertheless, as long as the Chinese government remains committed to its unrelenting approach to infection control, NIO faces future disruptions to its operations should there be further Covid-19 outbreaks in China.

NIO’s financial position

The company’s latest unaudited financial results present a mixed bag. In positive developments, quarterly vehicle deliveries to March 2022 leapt by 28.5% year-on-year to 25,768. Additionally, vehicle margin improved from 12.7% to 20.1% in 2021. To top off the good news, NIO’s total revenue last year beat consensus estimates, hitting $5.67bn — a 122% increase on 2020.

On the other hand, NIO isn’t profitable. The company incurred an annual net loss of $630m last year. CEO William Li doesn’t expect the EV manufacturer to turn a profit until 2024 at the earliest. This perhaps explains in part the drawdown in the NIO share price that followed the buying frenzy earlier in the pandemic.

What’s more, the company faces substantial cost pressures from soaring nickel and lithium prices. The metals are key components of its automobile batteries, compounding existing difficulties confronting the company from the global semiconductor shortage.

NIO is one of the riskier stocks on the market for me. The company possibly faces significant upcoming obstacles emanating from Chinese government policy and much of its value lies in its forecast future potential. On the flip side, I view the current NIO share price as cheap compared to direct competitors like Tesla.

Currently, I don’t own NIO stock, but I see this as an attractive entry point to make a speculative play in the EV market. I’d only take a small position, however, as I’m conscious of the unpredictable macro backdrop.

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Charlie Carman does not own any positions in the companies 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 shares are on the rise: should I buy now?

Dylan Hood — Thu, 31 Mar 2022 11:32:37 +0000

NIO (NYSE: NIO) shares are on the rise again. Yesterday they climbed higher, finishing the day at just over $22. The rising share price seems to be restoring some investor optimism, which is good news for me as I have held NIO shares for some time now. That being said, the shares are still down over 33% year-to-date and 41% over the past year. So, is now the right time for me to load up on more NIO stock? Or should I steer clear of the Chinese EV giant? Let’s investigate.

Bull case for NIO shares

As I have mentioned in all of my NIO articles, the thing that excites me most about the firm is its high growth. In its January and February 2022 delivery updates, NIO announced that its deliveries had climbed 33% and 10% year-on-year respectively.

In addition to this, just last week NIO released its Q4 and 2021 full-year results. Vehicle deliveries were up 109% compared to 2020, and Q4 vehicle deliveries rose 44% on the year. Although NIO is loss-making, its Q4 gross profit also rose 48%.

As an investor, all of these metrics fill me with confidence. If the firm can continue to deliver results such as these over the coming years, then I expect the shares to rise.

Not out of the woods yet

Although the firm has delivered excellent results, there are still some big risks I see in the near future. The biggest of these risks is rising interest rates. Since the tail end of the pandemic, inflation has been rising across the globe. This is mainly due to fiscal stimuli enacted by central banks during the pandemic, coupled with supply chain problems. The way that central banks tackle this issue is by raising interest rates to slow the economy’s growth. When rates rise, high-growth shares like NIO take a hit.

Earlier this month, the Federal Reserve raised US interest rates to 0.75%. As explained above, this is bad news for NIO shares. What’s more, global investment bank Goldman Sachs has announced it believes the Fed could hike rates another six times throughout 2022.

In addition to this uncertain macro-outlook, NIO has been struggling with supply shortages. In the Q4 earnings call, CEO William Li highlighted that chip shortage “will affect our production this year”. NIO currently uses around 1,000 chips per vehicle, of which 100 are estimated to face a shortage. This issue could dampen the growth of the firm, which I expect would be reflected by a stagnating share price.

The verdict

I think NIO has the potential to be one of the leading electric vehicle manufacturers. As a long-time holder, the high growth really does excite me. However, in the short-to-medium term, I think there are too many potential risks for me to consider buying more shares. As such, I won’t be adding to my holding today.

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NIO stock soared 38% last week. Should I buy now?

Dylan Hood — Mon, 21 Mar 2022 11:52:43 +0000

NIO (NYSE: NIO) stock has been super-volatile over the past month. However, things seemed to be going right for the Chinese EV giant last week, as the shares climbed over 38%. This was mainly due to news breaking that China has agreed to cooperate with the US to create more stability for listings overseas.

While this is good news, the shares are trading over 50% lower than this time last year. In addition to this, they’re down over 37% year-to-date, which is pretty bad by any standards. So is now the right time for me to add more NIO stock to my portfolio? Or should I be avoiding this volatile EV stock? Let’s take a look.

Bull case for NIO

NIO is a standout performer when it comes to growth. The firm has consistently delivered high growth in vehicle deliveries in almost every report it has issued in the last few years. In its January delivery update, it highlighted its deliveries had climbed over 33% compared to the previous year, with numbers reaching 9,652. This growth was also seen in its February update, where deliveries rose by 9.9% year-on-year. Broadening the horizon to the whole of 2021, deliveries saw a near 110% rise from 2020 levels.

Headwinds for NIO stock

I see three main headwinds that NIO stock will have to contend with over the next few months:

Firstly, rising inflation has forced central banks across the world to hike interest rates. Just last week, the UK and US raised rates to 0.75% and 0.25%, respectively. When rates rise, people can earn a higher return on their savings and hence steer away from riskier investments such as high-growth stocks. This could turn investors sour on NIO.

Secondly, the business has been struggling in the face of regulatory tensions. China has been clamping down on Chinese companies listed on US exchanges for some time now, and it has been weighing on the NIO valuation big-time. However, this risk seems to have been partially mitigated since NIO issued secondary shares on the Hong Kong Stock Exchange.

Thirdly, NIO has struggled with supply chain shortages for some time now. Semiconductors were in scarce supply even before the pandemic struck, and this shortage has been amplified by pandemic-related supply chain issues. These shortages caused it to suspend production in October 2021, which led to a 65% decline in total deliveries. If this risk persists, it could struggle to keep up its high growth.

What I am doing now

I have been a holder of NIO stock for some time now, and I still have long-term optimism for the firm. However, in the current climate, the shares seem too volatile for my liking. I think in the short-to-medium term there are too many factors pitted against NIO and hence I wouldn’t be surprised if the shares drop lower. Therefore, I won’t be adding more of the stock to my portfolio today.

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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.

Here’s why NIO shares fell 11% yesterday

Dylan Hood — Fri, 11 Mar 2022 12:06:32 +0000

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.

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NIO shares hit $20: should I buy now?

Dylan Hood — Mon, 28 Feb 2022 10:57:12 +0000

NIO (NYSE: NIO) shares have had a bumpy ride over the past few months. In fact, just last week they fell over 16%, finishing the week at a little above $20. For context, this time last year they were trading around the $50 mark. Although the situation looks bleak, I do think there is some long-term value in NIO stock. However, would I buy it today? Let’s take a closer look.

Encouraging fundamentals

The primary reason I see value in NIO stock is its high growth. In its January delivery update, the firm announced it had delivered 9,652 vehicles, up 33.6% from the year before. What’s more, total deliveries for 2021 were up over 109% from 2020. The high growth that the firm has been able to sustain really fills me with confidence. If this trajectory is kept up, I think NIO will inevitably rise in the future.

NIO shares are currently trading with of a price-to-book (P/B) ratio of 9.6 and a price-to-sales (P/S) ratio of 6.8. For comparison, industry leader Tesla’s P/B ratio is 29 and its P/S is 17. To me this highlights the value of NIO at current, especially considering its high year-on-year growth. The firm is set to release its fourth-quarter results on March 7. If it contains more high growth metrics, I expect the shares to jump upward.

Headwinds for the shares

Perhaps the most pressing concern NIO is facing is the Russia-Ukraine conflict, and the uncertainty this has created across the globe. Events like this have a wide-reaching impact on investor sentiment and so produce volatile markets. This is the last thing the NIO share price needs right now.

The state of the broader macroeconomy also seems to be against it. Higher government spending coupled with supply shortages — both induced by the pandemic — have led to rising inflation around the globe. The way that central banks tackle this is by hiking their interest rates. As a general rule, when rates rise, stocks take a hit. High-growth stocks like NIO are often hit the hardest. Needless to say, this is bad news for the Chinese EV manufacturer.

A final risk I see for the shares is the heavily competitive EV landscape. Well-established firms such as General Motors and Ford have set aside billions in R&D for EV production over the next couple of years. In addition to this, competitors such as Li Auto and Xpeng more than doubled their sales in January, highlighting the high growth of NIO’s competition.

The Verdict

Overall, I think NIO shares do offer me the chance for long-term growth. However, there are some serious short-term headwinds the firm is yet to overcome. Although I have owned NIO shares for some time now, I would like to wait until at least the March results are released before considering adding more shares to my portfolio.

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Dylan Hood owns shares in NIO Inc. 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 shares News | The Twelfth Magpie

Here are two beaten-down growth stocks I like the look of today

NIO

Rolls-Royce

The caveat

NIO shares are falling: is it time to buy at $19?

The lowdown

Electric results

The verdict

Is NIO stock a buy at $20?

Global economy

Encouraging results

The time to buy?

Is NIO stock about to explode?

The story so far

Is now the time to buy?

The verdict

NIO stock is rising: should I buy now?

Why NIO stock is up

Not out of the woods yet

The verdict

Why the NIO share price is down 46% in 2022

Crashing Chinese stocks

NIO’s financial position

Should I buy NIO at its current share price?

NIO shares are on the rise: should I buy now?

Bull case for NIO shares

Not out of the woods yet

The verdict

NIO stock soared 38% last week. Should I buy now?

Bull case for NIO

Headwinds for NIO stock

What I am doing now

Here’s why NIO shares fell 11% yesterday

Electric growth

Risks for NIO shares

What I’m doing now

NIO shares hit $20: should I buy now?

Encouraging fundamentals

Headwinds for the shares

The Verdict