NIO Just Got Its Second Upgrade of the Month, and It’s Big

Key Points

• Shares of NIO have rallied more than 100% in less than five months. 
• JPMorgan and Macquarie have both recently upped their ratings and price targets. 
• The stock has some solid catalysts on the horizon, which have the potential to send it even higher. 

NIO Inc NYSE: NIO is a Chinese electric vehicle (EV) manufacturer best known for its premium SUVs and sedans, and innovative battery-swap network. For many investors, though, the company remains a symbol of the stock market excesses and exuberance of 2020 and 2021. 

Despite operating at deep losses and generating only a fraction of its current revenue at the time, NIO’s stock soared more than 2,500% in under two years during the height of the equities bubble.

Those investors who managed to time their exit well enjoyed some serious gains, but the subsequent collapse proved devastating for everyone else. From its peak, NIO fell more than 95% through the start of last April, turning into a cautionary tale about how quickly fortunes can reverse.

Having once been the poster child of growth stocks, NIO had come to be seen far more as a warning than an opportunity. 

However, over the past summer, something interesting has been happening; NIO shares have stopped falling. In fact, they’ve more than doubled since April, and there are several reasons to think the comeback rally is just getting started. Let’s jump in and take a look. 

NIO’s Comeback Gains Momentum

Their first attempt at a comeback rally was off April’s lows, which saw shares bounce 45% before sellers regained control. Yet the bears couldn’t drive the stock to new depths.

A second rally in July took the stock up 55% before it, too, was sold down. Again, the downside momentum fizzled, and the stock set a bullish-looking higher low. Since then, NIO has added another 45%, meaning its shares have gained upwards of 100% in less than five months.

That resilience is hard to ignore, making NIO one of the hottest EV stocks. It has attracted speculative traders back into the name and caught the attention of Wall Street analysts, who are shifting their stance.

Back-to-Back Upgrades Signal Renewed Optimism

On Tuesday of this week, the team over at JPMorgan added fresh fuel to the fire.

Analyst Nick Lai upgraded his rating on NIO from Neutral to Overweight and lifted his price target from under $5 to $8—an increase of more than 60%.

Even after the stock’s latest rally, that target still points to around 25% of additional upside.

This was the second upgrade in just a few weeks. Earlier in the month, Macquarie upped its rating on NIO to Outperform, while raising its FY25 and FY26 delivery forecasts by more than 40%.

Macquarie also highlighted the company’s newly launched Onvo L90 SUV, calling it a “potential blockbuster” and possibly its most competitive product to date.

Upcoming Events Highlight Both Near-Term and Long-Term Upside

Several upcoming events also underpinned the bullish stances and should bolster the ongoing turn in investor sentiment. The first is the company’s Q2 earnings report, due next Tuesday, which will give investors a fresh chance to gauge how margins and deliveries are after a difficult first half of the year.

Later in the month, the company’s annual NIO Day is expected to feature the final pricing strategy for some of its newest models, which should help lift sales. Then in November, attention will shift to the Guangzhou Auto Show, where NIO is set to unveil the Onvo L80, a five-seater SUV aimed squarely at Tesla Inc.’s NASDAQ: TSLA Model Y. 

Early signs of pre-orders are encouraging, which has surely played a large role in the stock's rise ahead of its next earnings report. At the same time, management has been making strategic moves that hint at ambitions that reach beyond vehicles and into robotics, underscoring the company’s long-term focus on advanced technology—something investors also love to hear. 

Why the Risk-Reward Still Favors the Bulls

Still, it has to be noted that this past summer’s rally has been pretty aggressive, and there are some obvious near-term risks. NIO’s Relative Strength Index (RSI) reading, for example, is hovering around 70, a level that suggests the stock is approaching overbought territory. A disappointing earnings report or weaker-than-expected forecast could trigger some sharp profit-taking. Don’t forget, the company is still digging itself out of a deep hole, and execution risk remains high.

That said, conditions look brighter than they have in years. With back-to-back upgrades, new products gaining traction, and multiple catalysts lined up in the months ahead, the risk-reward setup is compelling.