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NIO stock has fallen 40%! Should I buy the shares?

first_imgSimply click below to discover how you can take advantage of this. Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of and has recommended NIO Inc. and 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 has fallen a staggering 40% from its all-time high of around $63, reached at the beginning of February.This decline appears worrying at first, but I should put it into perspective. Over the past year, shares in the company have increased in value by 950%.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…So, despite recent declines, shareholders who have been with the business since May of last year have seen attractive returns. NIO stock: attractive qualities Investors have been rushing to buy NIO stock over the past year as the company’s outlook has dramatically improved. The electric vehicle producer reported a surge in vehicle deliveries for the first quarter of the year. Deliveries were up from 3,838 to 20,060. Meanwhile, gross profit jumped 36.2%. In my opinion, there are two reasons why this company stands out as an electric vehicle producer. First of all, NIO is targeting the rapidly growing Chinese market. China accounted for 41% of global electric vehicle sales in 2020. An estimated 1.9m electric vehicles will be sold in the country this year, approximately 9% of total vehicle sales. By 2025, the percentage is expected to rise to 35%. Nio should be able to capitalise on this tailwind.Secondly, the group operates a battery-as-a-service (BAAS) model whereby consumers can purchase electric vehicles without batteries at a lower cost. Consumers can then pay for batteries through monthly subscriptions.What’s more, all subscribers can swap uncharged batteries for fully charged batteries at 193 swapping stations throughout China. The number of these stations could grow to 500 by the end of the year. As the price of electric vehicles is one of the main reasons why consumers are put off from buying, NIO’s model makes a lot of sense. Especially in China, where average incomes are much lower than in the West. The BAAS model also removes consumers’ need to find a charging station. A better buyThese qualities attract me to NIO stock. But, as I’ve mentioned in the past, I’d rather own the firm’s competitor, Tesla. The reason is simple. Companies and organisations worldwide are spending hundreds of billions of dollars developing electric vehicles and other green technologies.At this point, there’s no telling which companies will succeed and which will fail. Over the past 100 years, hundreds of car manufacturers around the world have come and gone. It’s just the nature of the industry. Based on these odds, I’d rather own the sector’s largest and most recognisable enterprise. Furthermore, as the China-based electric vehicle manufacturer is still loss-making, it is hard for me to value NIO stock right now. As such, I wouldn’t buy the stock after its recent declines.Plenty of other companies are following the same path, and there’s no telling at this stage which will prosper and which will fail. NIO has attractive qualities, but its competitors do as well.  Our 6 ‘Best Buys Now’ Shares Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge! I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. NIO stock has fallen 40%! Should I buy the shares?center_img See all posts by Rupert Hargreaves I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement. Image source: Getty Images Enter Your Email Address “This Stock Could Be Like Buying Amazon in 1997” Rupert Hargreaves | Sunday, 9th May, 2021 | More on: NIO last_img


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