TLDR
- NIO stock fell 2.8% to $3.69 on Wednesday on above-average volume of nearly 49.8 million shares
- Multiple analysts downgraded NIO including JPMorgan, RBC, Bernstein, Zacks and Freedom Broker
- JPMorgan cut its price target from $7.00 to $4.50 and downgraded from overweight to neutral
- NIO’s Q2 results showed stronger revenue of $4.73 billion but the company remains unprofitable with a negative net margin of 3.95%
- The stock is down 23% over the past 30 days and 35% over the past year
NIO stock dropped 2.8% on Wednesday, hitting as low as $3.68 before closing at $3.69. Volume came in at nearly 49.8 million shares, up 31% from the daily average.
The move follows a wave of analyst downgrades that hit the stock in early September.
JPMorgan cut NIO from overweight to neutral and slashed its price target from $7.00 to $4.50. That was one of the more aggressive moves on the Street.
Bernstein also trimmed its target, moving from $6.00 to $5.00 while keeping a market perform rating. Both Zacks and Freedom Broker dropped their strong-buy ratings to hold on September 2nd.
Royal Bank of Canada moved to a sector perform rating on September 3rd, adding to the pile of cautious calls.
The consensus rating now sits at Hold, with an average price target of $6.21. Six analysts still have buy ratings, eight have hold, and two have sell.
Q2 Results Show Revenue Growth, but Losses Persist
NIO posted Q2 revenue of $4.73 billion, an improvement from prior quarters, and the net loss narrowed. But the company still reported zero EPS for the quarter.
The net margin sits at negative 3.95% and return on equity is negative 111.37%. Analysts expect full-year EPS of negative $0.16.
The 50-day moving average is $4.59 and the 200-day is $5.29, both well above current price levels. The stock’s market cap sits at $9.15 billion with a debt-to-equity ratio of 2.11.
Stock Price vs. Valuation Gap
One valuation model pegs NIO’s fair value at $7.31 per share, nearly double the current price of $3.70. That case rests on delivery growth from new models including the ONVO L90, the refreshed ES8, and the FIREFLY.
The stock is down 23.24% over the past 30 days and 35.31% over the past year, even as the business has shown revenue improvement.
Institutional investors hold 48.55% of the stock. Several smaller funds added to positions in recent quarters, though position sizes were modest.
NIO’s reliance on the Chinese market and continued losses remain the key factors weighing on investor sentiment.
JPMorgan’s new $4.50 price target sits closest to where the stock is currently trading.
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