NIO (NYSE:NIO) is a stock trader’s dream. In the blink of an eye, this electric vehicle (EV) share can whipsaw 10% or more.
However, I’m a long-term investor, so I’m interested in the company’s underlying fundamentals. And while impressed with NIO’s innovative EVs and sales growth, I’ve always been wary due to the company’s ongoing losses.
It seems the market has shared my concern, with the share price down 86% over the past five years.
Yet NIO — sometimes dubbed the ‘Tesla of China’ — just posted its first ever profitable quarter, potentially removing a key bearish obstacle for me. So, with the stock down 26% since October, should I add NIO to my ISA at $5?
A potential turning point
As mentioned, NIO just reported its first ever quarterly net profit in Q4 of 2025. Adjusted operating profit was $178.9m, a far cry from the $860m lost from operations the year before. And there was a surprise net profit of $40.4m for the quarter.
Also impressive was that revenue jumped 79.5% to $4.95bn, beating expectations, as it delivered 124,807 vehicles (up 71.7%). This was fuelled by the company’s multiple brands — NIO, ONVO, and Firefly — that target different market segments.
For example, NIO’s Firefly EV is a premium small vehicle, which is launching across Europe and the UK this year. Meanwhile, the ONVO L90 SUV and massive NIO ES8 remain best-sellers in their respective categories.
For the full year, revenue increased 33.1% to $12.5bn, while the vehicle margin improved to 14.6%, up from 12.3% in 2024. Encouragingly, the vehicle margin hit 18.1% in Q4, as NIO benefitted from the high-margin premium ES8. R&D expenses also fell significantly.
Management is guiding for 80,000 to 83,000 vehicle deliveries this quarter, representing an increase of about 90.1% to 97.2%. As volumes increase, NIO could finally reach the economies of scale needed to turn consistently profitable.
Cramer turns bullish
Therefore, it’s easy to see why some investors are changing their tune on the EV maker. One is CNBC‘s Jim Cramer, the host of Mad Money. This week, he turned bullish on the stock for the first time in years.
Agreeing with a caller on the show, Cramer said: “I think you’re absolutely right. They did have a good quarter. I’m going to go with you. Five bucks. Let’s do it. It’s a spec. That’s okay. You’re allowed one spec.”
Now, ‘spec’ (speculative) here means that he still sees NIO as a high-risk, high-reward stock. And I would agree with this, because one swallow does not make a summer, as it were. NIO still posted a net loss of $2.1bn last year.
If inflation from the escalating Iran conflict hits the global economy hard, NIO’s progress could be derailed. For example, lithium and chip costs could rise higher, putting pressure on margins.
Then again, these are (hopefully) near-term issues. The global EV market is only going to get larger, creating strong growth opportunities over the long run for innovative carmakers like NIO.
My move
Given the incredible competition in the EV market today, when even Tesla is struggling to drive sales growth, I’m impressed with NIO’s ongoing progress.
However, I’m going to keep the stock on my watchlist for now to see whether the profitable quarter was merely a one-off.
