Nio Inc (NYSE: NIO) opened more than 10% up on Thursday after a JPMorgan analyst issued a super bullish note in its favour.
Nick Lai now sees upside in the EV stock to $8.0.
Lai attributed his constructive view primarily to the company’s mass-market ONVO brand that launched an all-new L60 SUV last week to go up against Tesla’s Model Y.
The electric vehicles firm has priced its L60, battery electric mid-size crossover SUV, at just over $21,000 that makes it significantly more attractive than the Model Y.
The value proposition is already translating to massive interest and will eventually reflect in the Nio stock price, as per the JPM analyst.
L60 sales momentum to reflect in Nio stock price
Nick Lai issued the bullish note after visiting three major ONVO stores in Shanghai.
Slots for a test drive, the analyst discovered, were fully booked following the launch of L60 that spells strong sales momentum and successful product positioning, he told clients in a note today.
“Superior interior space” and a more luxurious cabin feel compared to the Model Y are also attracting potential buyers of electric vehicles to the ONVO L60, as per the JPMorgan expert.
Much like the Model Y, the demographic most interested in the SUV are young couples or families with young children. But the price of L60 and what it has to offer “is arguably more attractive for those buyers,” he added in his research note on Thursday.
Nio could soon be operating cash flow positive
The JPM analyst forecasts L60 sales (monthly) to reach up to 40% of Tesla’s Model Y in 2025. Simply put, he expects ONVO to sell well over 10,000 units of the said SUV next year, which would materially improve the financial and operational performance of Nio Inc.
The expected sales momentum, according to Nick Lai, will begin to improve the overall cash flow of the New York listed firm in the months ahead. In fact, he expects NIO to achieve positive operating cash flow in the final quarter of 2024.
Note that the EV company reported a record 57,373 deliveries for its second quarter, which helped revenue nearly double to $2.40 billion.
Strengthening footprint in the European markets and a debut in the United Arab Emirates expected next year could also serve as significant tailwinds for shares of the Shanghai-headquartered firm.
Our market analyst Crispus Nyaga also has a positive stance on Nio stock especially since it’s slated to introduce a low-end electric vehicles brand, Firefly, in 2025.
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