Jim Cramer Warns Against NIO Investment

Jim Cramer advises investors to "stay away" from NIO Inc. (NYSE:NIO) due to a flooded market and potential better buys. The stock has declined nearly 33.5% since his comment. NIO develops and sells smart electric SUVs and sedans, along with a full ecosystem of charging and after-sales services. Macquarie upgraded NIO to Outperform with a $5.50 price target, but investors may consider alternative AI stocks with greater upside potential and less downside risk.

Investors have been advised by Jim Cramer to "stay away" from NIO Inc. (NYSE:NIO) due to a flooded market and potential better investment opportunities. Since his cautionary comment, the stock has declined nearly 33.5% [2]. NIO Inc. develops and sells smart electric SUVs and sedans, along with a comprehensive ecosystem of charging and after-sales services.

Macquarie recently upgraded NIO to "Outperform" with a $5.50 price target [2]. However, investors might consider alternative AI stocks with greater upside potential and less downside risk, according to Cramer's advice. The Zacks Automotive – Foreign industry presents a mixed picture based on sales trends in China, Japan, and Europe [3].

Strong demand for new-energy vehicles (NEVs), government incentives, and rapid technological innovation are boosting growth in China. Japan’s auto market is experiencing a stable recovery, supported by solid domestic demand. In contrast, Europe’s market is struggling with declining sales, policy-related pressures, and competitive challenges [3].

The Zacks Industry Rank for the Automotive – Foreign industry is 183, placing it in the bottom 26% of all 250+ industries. The industry’s Zacks Rank, which is the average of the Zacks Rank of all member stocks, indicates dim near-term prospects. The industry has underperformed the Auto-Tires-Trucks sector and the S&P 500 over the past year [3].

NIO Inc. ended the recent trading session at $4.60, demonstrating an -8.18% change from the preceding day's closing price. The stock's change was less than the S&P 500's daily gain of 1.47% [1]. Heading into today, shares of the company had gained 42.74% over the past month, outpacing the Auto-Tires-Trucks sector's gain of 0.26% and the S&P 500's gain of 0.64% [1].

The upcoming earnings release of NIO Inc. will be of great interest to investors. The company's upcoming EPS is projected at -$0.3, signifying a 11.76% increase compared to the same quarter of the previous year. Meanwhile, our latest consensus estimate is calling for revenue of $2.76 billion, up 14.78% from the prior-year quarter [1].

Investors might also notice recent changes to analyst estimates for NIO Inc. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook [1].

References:
[1] https://www.nasdaq.com/articles/nio-inc-nio-stock-slides-market-rises-facts-know-you-trade
[2] https://finance.yahoo.com/news/jim-cramer-suggests-stay-away-040017168.html
[3] https://finance.yahoo.com/news/3-foreign-auto-stocks-gain-135600235.html