The Motley Fool

How much is the NIO share price really worth?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

A man opens a car boot
Image: Auto Trader

As the NIO (NYSE: NIO) share price has cratered over the past few weeks. So I’ve been trying to determine how much the company’s worth. 

I’ve been taking a closer look at the China-based business because I think electric vehicles (EVs) are the future, especially considering the amount of money and time governments worldwide are spending on increasing their uptake. And there are hundreds of different ways investors can buy into this theme.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story. In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

The NIO share price opportunity 

NIO is one of the largest and most visible EV manufacturers in the world. It also has a strong foothold in the Chinese market. This is projected to be one of the biggest markets for EVs for the foreseeable future. 

And as well as these positive qualities, I’m also attracted to the company’s technology. In particular, the group’s replaceable battery packs are unique in the sector and overcome a significant drawback all electric cars have so far struggled with, namely range.

By quickly replacing batteries on a long journey, using an EV becomes just as straightforward as driving a petrol or diesel car on a long trip. 

Still, despite the operation’s desirable qualities, it’s still losing money. In the second quarter of 2021, NIO lost nearly $91m on sales of $1.3bn. 

A relatively small company

This is where it becomes challenging for me to place a value on the NIO share price. Yes, the firm owns some exciting technology, but it still isn’t returning a profit. It also remains just a speck on the global automotive industry landscape. 

To put its size into perspective, European automotive giant Volkswagen earned $6bn in the second quarter of 2021 on revenues of around $80bn. 

NIO’s growth could also be threatened by Chinese policymakers, which have recently been clamping down on the country’s technology sector. This is one of the reasons why investors have been selling the NIO share price recently. There’s no telling which company regulators will move onto next. 

Considering all of the above, how does the company’s valuation compare to a close peer like Tesla? Well, using the price-to-sales (P/S) ratio, which is one of the best ways to place a value on a loss-making company, Tesla is trading at a forward P/S ratio of 14. Meanwhile NIO is selling at a ratio of 11.  

These comparison metrics appear to show the NIO share price is undervalued. 

The bottom line

As such, I think that in the perfect world, the stock could be worth more than its current value, based on the comparison with Tesla.

Unfortunately, this is currently an incredibly uncertain time for Chinese companies listed in the US. Therefore, I wouldn’t buy the stock today. I think it’s just too difficult to establish its future potential. 

Our #1 North American Stock For The ‘New-Age Space Race’

Billionaires like Jeff Bezos, Bill Gates, Elon Musk, and Mark Zuckerberg are already betting big money on the ‘new-age space race’, and for one very good reason…

…because this is an industry that according to Morgan Stanley could be worth $1 TRILLION by 2040.

But the problem is most of their investments are in private companies — meaning they’re largely off-limits for everyday investors.

Fortunately, our team of analysts have identified one little-known company that’s at the cutting-edge of the space industry, and is currently trading at what looks like a VERY reasonable valuation

for now.

That’s why I want to urge you to check out our premium research on this top North American space stock ASAP.

Simply click here to see find out how you can grab your copy today

Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended NIO Inc., Tesla, and Volkswagen AG. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.