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Nio Downgraded to Sell at Goldman Sachs

Nio’s 85% rally in the past month wasn’t accompanied by significant increases for volume and profit forecasts, Goldman Sachs says.
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Nio  (NIO) - Get NIO Inc. (China) Report shares fell in premarket trading Friday after Goldman Sachs analyst Fei Fang downgraded the stock for the second time in a month - to sell from neutral this time on valuation concerns.

He kept his share-price target at $7.

Nio’s 85% rally in the past month represents “over-optimism,” Fang wrote in a report. That’s because the surge wasn’t accompanied by significant increases for volume and profit forecasts.

Still, he believes in Nio’s long-term story thanks to China’s electric vehicle adoption, its affinity for premium cars and the "scarcity of being China's first home-grown high-end passenger vehicle brand."

Fang's recommendations have produced a negative 5% return in the past year, compared with a 292% return on the shares, according to Bloomberg. He has rated NIO neutral twice and buy twice in the past 16 months..

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Earlier this month, Nio reported that its vehicle deliveries nearly tripled in June and in the second quarter from the year-earlier periods.

Nio delivered 3,740 vehicles in June and 10,331 in the second quarter. The second-quarter figure was more than double the first-quarter figure.

For the first half of the year, deliveries totaled 14,169.

In June, the company delivered 2,476 ES6s, the company’s 5-seater, and 1,264 ES8s, the six- and seven-seater models.

“In June, we achieved a historical high of monthly deliveries, contributing to our best quarterly performance,” William Bin Li, founder and chief executive, said in a statement.

Nio shares traded at $12.10, down 6.56%, and have soared 222% year to date through Thursday.