NIO’s “self-redemption”: After improvements in sales, next comes the finances
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For investors following NIO, this latest report from Nomura Securities delivers a complex but clear signal: NIO's "self-redemption" has begun, but is far from complete.
According to information from Chasing Wind Trading Desk, in a report on the 22nd, Nomura stated that NIO, relying on its successful pricing strategy and strong orders for new products (Le Dao L90 and the new ES8), has reversed its sales downturn and addressed current demand challenges. Based on this, Nomura raised NIO's target price significantly from $5.00 to $8.40, while maintaining a "neutral" rating. This implies about 22% upside from the current stock price.
However, analysts also pointed out that although the sales challenges have been temporarily alleviated, NIO's financial condition, especially compared to its peers, still appears somewhat fragile. Analysts believe that investors need to be patient, as the company still needs time to achieve "meaningful improvement" in its financial situation.
As for NIO's future, Nomura's forecast is mixed. On the one hand, the bank expects NIO's market share to continue increasing, and possibly achieve full-year break even in 2027, earlier than generally expected by the market. On the other hand, in order to achieve this, the company must make greater efforts in operational efficiency and cost control to address the margin pressure brought by its "price-for-volume" strategy.
Strong New Vehicle Orders, Sales Downturn Reversed
NIO earlier this year was once troubled by sluggish sales growth, but the recent performance of the latest two models has enabled it to successfully emerge from the trough. Nomura's report points out that NIO's newly launched Le Dao L90 and the new ES8 are both enjoying solid demand.
According to Nomura's market survey, Le Dao L90 has maintained a weekly order volume of 2,000 to 3,000 units. Meanwhile, confirmed orders for the new ES8 have reached nearly 50,000 units, a number that already exceeds the production capacity ceiling for this model for the remainder of 2025. The strong orders provide a solid guarantee for NIO's delivery growth in the second half of 2025.
Analysts believe that if NIO continues similar strategies for new models next year, its growth outlook will be optimistic.
Financial Condition Remains the Next Major Challenge
After temporarily resolving demand-side challenges, NIO's focus is now turning to the more difficult issue of finance. Nomura's report highlights that compared to competitors, NIO's balance sheet remains "somewhat fragile." A key detail is that the company's shareholders' equity only just turned positive after the most recent placement, showing its financial foundation is still unstable.
Analysts believe that given that auto sales typically enter the off-season in the first half of the year (e.g., the first half of 2026), NIO may need further investment to maintain operations. Therefore, even if NIO can maintain its current business momentum, its financial health will still require more patience and time to achieve "meaningful improvement."
Earnings Forecast Revision: Short-term Pressure, Long-term Optimism
Based on the latest sales momentum, Nomura has adjusted NIO's financial forecasts, reflecting short-term pressure but long-term improvement.
The bank lowers its 2025 fiscal year delivery forecast by 9.5% to 352,000 units and revenue forecast for the same year by 11.7%, mainly reflecting the effect of the business transition period. However, thanks to the strong momentum of new models, Nomura raises 2026 and 2027 fiscal year delivery forecasts by 0.9% and 12.7% respectively. The report forecasts NIO's revenue CAGR from 2024 to 2027 will reach 32%.
In terms of profitability, due to the "price-for-volume" strategy, Nomura slightly lowers the gross margin forecast for 2025-2027 fiscal years by 0.2 to 1.2 percentage points. However, thanks to better control of R&D and SG&A expenses, the bank revises up operating margin expectations for 2026 and 2027 and expects NIO to achieve full-year break-even in 2027.
In summary, Nomura maintains its "neutral" rating on NIO, raising NIO's target price from $5.00 to $8.40, which is 22% above the current closing price of $6.91.
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