Can Nio Stock Go From $40 to $400 In 18 Months?

NIO Inc. has been a sought-after trade for retail investors, who are convinced the stock will overcome the current lackadaisical phase and resume its rally.

What To Know:The optimism was evident in apostin the r/NIO_Stock forum, where a Redditor identified as u/rkay0820 suggested Nio shares could go from $40 to $400 in about 18 months.

Nio is currently trading shy of the $39 mark amid the recent sell-off in tech stocks and the chip shortage that forced the company to temporarily idle capacity at its plant. Not long ago, the stock rose to its all-time peak of $66.99 before a confluence of factors dragged it lower.

More importantly, the user pointed to the fact that Tesla Inc.'s vehicle deliveries increased from 22,000 in the fourth quarter of 2016 to 180,000 in the fourth quarter of 2020. In the same timeframe, the stock soared from $50 to $800.

The Redditor said Nio can go from the current pace of deliveries of 20,000 to 150,000 in the third quarter of 2022, as its second factory comes online. This would mean Nio stock could hit the $400 milestone in 18 months, said the Redditor, adding that Nio is bolstered in its quest for supremacy by governmental support, the booming EV market opportunity in China, premium pricing of its vehicles, higher gross margins, limited competition in the high-end EV market and the proposed Hong Kong secondary listing.

Benzinga's Take:Nio is armed with the wherewithal to carve a niche for itself in the EV market. The company has been dynamic in responding to the evolving climate, and clear evidence was its ability to meet production targets in the first quarter despite constrained by the chip shortage that forced factory closure.

The company has made the concept of battery-swapping its own. Later this week, the company is set to announce a partnership with Sinopec Shanghai Petrochemical Co. to establish its second-generation battery swap station at the latter's gasoline stations.

Nio is all set to kickstart its European expansion, planning to set up its first showroom in Norway in September.

The company will commercially launch its recently announced ET7 sedan, which by the company's own account, will give an altogether different experience to users. A cost-competitive sedan, probably under a different brand name, is also in the offing.

That said, Nio could be in for near-term execution risks, especially in hitting production goals as the global chip shortage is expected to persist at least until the second quarter of 2022.

Competition in the EV market is also heating up.

NIO Price Action: NIO Nio shares were adding 3.61% to $38.48.