Shares of Nio Inc. (NYSE: NIO) are up over 7% since Friday’s close following Citi’s decision to upgrade the stock from ‘neutral’ to ‘buy’ with a price target of USD 58.30. The Chinese EV Automaker’s deliveries in May fell 5.5% due to the global semiconductor chip shortage. Though the Company managed to sell just 6,711 last month, EV sales are still up 95% year-over-year. “In May, the Company’s vehicle delivery was adversely impacted for several days due to the volatility of semiconductor supply and certain logistical adjustments,” Nio said in a statement. “…based on the current production and delivery plan, the Company will be able to accelerate the delivery in June to make up for the delays from May,” the Company said in a statement. The Company later added that it expects deliveries to reach between 21,000 to 22,000 vehicles by the end of Q2 2021.
Nio is considered by many as Tesla’s top competitor in the global EV market and has quickly become one of the hottest stocks in the EV sector. Last year, overspeculation had sent the Company’s stock into a frenzy as it skyrocketed roughly 1,100% to over USD 60 per share in 2020. Shortly after the start of this year, shares of Nio had pulled back due to it being significantly overvalued as well as the negative impact of the semiconductor shortage on the global EV market. Now, Citi analyst Jeff Cheung upgraded Nio’s stock from ‘neutral’ to ‘buy’. “We sense a strong demand recovery from late Apr-21 in China NEV after SH auto shows, and expect NIO’s monthly new order volumes in May-Jun to be 20-30% higher than the average monthly level in 4Q20 peak season. After the recent stock price correction from the peak in 4Q20, we believe this is a good re-entry point for the long-term investors, given the ongoing re-rating catalysts,” Cheung stated.