NIO Inc. (NYSE:NIO): Is break-even close?

We believe that now is a good time to analyze NIO Inc.’s (New York Stock Exchange:NIO) business as it appears, the company may be on the cusp of considerable achievement. NIO Inc. designs, develops, manufactures and sells intelligent electric vehicles in China. The $33 billion market cap company’s loss has narrowed since it announced an 11 billion yuan loss for the full financial year, compared with the last loss of 7.5 billion yuan in the last twelve months, as approaching the equilibrium point. Since the path to profitability is the topic of concern to NIO investors, we have decided to gauge market sentiment. Below, we will provide a high-level summary of industry analysts’ expectations for the company.

See our latest analysis for NIO

NIO is on the verge of breaking even, according to the 27 analysts at American Auto. They anticipate the company to incur a final loss in 2023, before generating positive profit of CN¥2.4b in 2024. Therefore, the company is projected to break even around 2 years from now. To meet this break-even date, we calculate the rate at which the company must grow year over year. It turns out that an average annual growth rate of 84% is expected, indicating great confidence on the part of analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings per share growth
NYSE:NIO Earnings Per Share Growth August 19, 2022

We will not discuss company-specific developments for NIO as this is a high-level summary, however please note that a high forecast growth rate is generally not unusual for a company currently in in an investment period.

One thing we would like to bring to light with NIO is its relatively high level of debt. Debt generally should not exceed 40% of your equity, which in the case of NIO is 50%. Keep in mind that a higher debt obligation increases the risk of investing in the losing business.

Next steps:

There are key NIO fundamentals that are not covered in this article, but we must again emphasize that this is just a basic overview. For a more comprehensive view of NIO, take a look at NIO company page on Simply Wall St. We have also put together a list of key factors that you should investigate further:

  1. Valuation: How much is NIO worth today? Has future growth potential already been factored into the price? the intrinsic value infographic in our free research report helps to visualize if NIO is currently mispriced in the market.
  2. Management team: An experienced management team at the helm increases our confidence in the business – take a look at who sits on the NIO board and the background of the CEO.
  3. Other High Yield Stocks: Are there other stocks that provide better prospects with proven track records? explore our free list of these great actions here.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock, and it does not take into account your goals or financial situation. Our goal is to provide you with long-term focused analysis driven by fundamental data. Please note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.

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