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Neo (NYSE: NIO ) stock has attracted significant investor interest in recent years. In 2022, Cathie Wood’s ARK Autonomous Tech & Robotics ETF Share price history took a position in the company for the first time, although the innovation-focused portfolio manager has already trimmed his shares to buy more shares in the US competitor Nio, Tesla.
Admittedly, China’s electric vehicle (EV) manufacturers are holding extraordinary rallies during the pandemic. However, the stock price started to fall after peaking in January 2021.
So, how much would it be if I had invested £1,000 in the company two years ago? Let’s explore.
Two years back
Two years ago, Nio could be sold for 59.03 US Dollars. Using the exchange rate at the time, I was able to buy 23 shares, leaving £9.35 in spare change.
Today, the stock price has fallen to just $12.71. This may not be surprising given that the company has faced two challenging years.
China’s strict Covid-19 lockdown and economic slowdown have caused severe supply chain problems at the company’s production plant in the city of Hefei, which has hurt the stock’s investment prospects.
Converted back to sterling, the total value of my investment would shrink to £236.22. The -76% return is dangerous.
To add to the pain, Nio does not pay dividends, so I have no passive income to add to the calculations.
Today, Nio stock price online
After the big haircut, how does Nio stock look now?
Well, there are signs of budding recovery. The stock price has rocketed in 2023, with a 32% gain this year to date. The rebound was supported by some promising financial results. During the fourth quarter of 2022, the business delivered more than 40,000 vehicles – a 60% increase on the previous year.
What’s more, the company has ambitious expansion plans. After starting the 2021 European launch in Norway, Nio now offers the new models – ET7, EL7, and ET5 – in Germany, Denmark, Sweden, and the Netherlands. It is looking to enter the UK market later this year.
The business also aims to operate battery exchange stations around the world, which allow for faster charging. Each station can hold up to 13 batteries and is about the size of six car parking spaces. Nio wants to implement 4,000 stations worldwide by the end of 2025, including more than 1,000 outside China.
However, the company faces risks from domestic and overseas competition. Although Nio has established itself as the market leader in the premium EV sector in China, it has fallen behind its competitors Li Auto in 2022. Li Auto delivered around 133,000 vehicles, followed by Nio’s 122,000.
In addition, Tesla is starting to enter the lucrative Chinese market. CEO Elon Musk recently announced a price cut of between 6% and 13.5% for all versions of the Model 3 and Model Y cars in China.
I want to buy?
I think the outlook for Nio stock is improving as China reopens. This represents the removal of headwinds to further growth and hopefully bodes well for the company’s expansion plans.
However, it’s the growing competition that worries me. The company faces an uphill battle for market share, both at home and abroad. Overall, I’m steering clear of Nio stock right now.
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