Nio (NYSE 🙂 was the first company to enter the electric car market in 2014 with its “New-gen smart vehicles.” This Shanghai-based automobile manufacturer went public on the NYSE in 2018 under the ticker symbol NIO. The company is now a top-ranked electric vehicle manufacturer in China. 

NIO stock rose to $62 per share in January, a new record. Investors looking for Tesla (NASDAQ) -like growth are seeking out smaller EV companies as long-term investments. NIO stock is a favourite among investors.

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Nio has been called the “Tesla in China”, and is a high-growth stock. It also enjoys the blessings of the CCP. Nio, unlike Tesla which has many risks in China during the time of conflict between the U.S. & China, is the CCP’s golden child in the promotion of a green, innovative future.

Nio has great long-term prospects. It is also a better stock than Tesla. We’ll look at a few of the reasons this is true. (See Nio stock charts on TipRanks)

China Crackdown on Tech Stocks

This past year, the Chinese government has focused on passing certain pieces of legislation. Officials in China have shifted their focus to reducing monopolistic practices, ensuring prosperity for all and not just the wealth of those who possess capital.

Also, new laws regarding data protection directly impact EV manufacturers like Nio. This is done to tighten data protection and eliminate illegal online activities. NIO, which is listed on the U.S. stock exchange, is subject to cybersecurity reviews.  Didi Global, which is listed at NYSE, had to suspend user registrations as a result of this review. Even Alibaba (NYSE:), one of the largest Chinese tech companies, has lost hundreds of billions in market cap via this crackdown. 

China Communist Party’s (CCP), five-year plan is what it considers the pathway to growth. CCP is hoping to offer firmer guidance on the direction of the economy through increased regulations.

For investors who invest in tech stocks to make their returns, regulations may not be a good idea. Capitalism is built upon the belief that there can be unlimited growth. Individual companies are limited in their ability to invest when the government limits them.

This has been true for Nio’s hyper-growth investment. Investors are pricing in greater risks of profit sharing, even though the CCP has not directly targeted Nio. However, companies might be required to enact voluntary profits sharing to make the CCP more comfortable.

Investors have a rare opportunity to invest in Nio, who is the symbol of the EV revolution happening in China. China won’t likely want to kill its golden geese. It seems that it is merely harvesting eggs right now. Nio is a long-term investment that can be considered safe in China’s tech sector.

Why is NIO stock still a favorite of some investors?

There are many reasons why investors love Nio, not only because of Nio’s role as a rallying cry by Chinese regulators in promoting a strong stockmarket.

The Chinese electric vehicle market is huge. The Chinese EV market is not only the biggest in the world but it also outperforms its economic counterparts in terms of growth in this area.

These results reflect this growth in Nio’s quarterly results. Nio posted a remarkable Q2 on its top- and bottom lines. In terms of delivery growth, the company saw triple-digit increases. Luxury electric SUVs were in high demand. Year-over year, the rate of growth was 112%.

NIO saw a 145% increase in revenue over the past year, reaching $1.3 billion. The company still lost money, however. It suffered a loss of $0.03 per share in the last quarter. Analysts were anticipating a loss $0.09 per share. That’s an improvement over the loss $0.17 per share in the prior quarter.

Nio anticipates the next quarter to be even more successful, in spite of the worldwide chip shortage and other limitations that are affecting this sector. Nio has outlined a plan for increased deliveries to 25,000 with revenue between $1.38 and 1.49 billion.

From a fundamentals standpoint, Nio’s growth path is very positive. As Nio strives to become a world leader in EVs, investors can expect great benefits. Nio will capitalize on the dominance of electric vehicles in Norway.

Tesla remains the most prominent name in Norway at the moment. However, Nio’s ES8 Launch in Norway is likely to shift the market. 

What Are Analysts Saying About NIO Stock

The consensus TipRanks analyst rating is that Nio is a Buy. Seven Buy recommendations are based on 7 analyst ratings.

This stock has an average NIO price target of $62.44, implying an upside of 74.3%. Analyst targets for price ranges from $72 per share up to $47 per per share. 

Bottom line

It is true that Nio’s future looks bright, but it’s not right to say that recent regulatory and political restrictions are insignificant. These regulatory conditions will have negative effects on Chinese tech stock stocks.

Despite this, it’s still a good reason to be bullish about Nio. The growth rate of this EV manufacturer is unmatched by any other. Those looking to reap Tesla-like returns might want to consider the Tesla of China.

Disclosure: Chris MacDonald had no position at the time this article was published.

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