NIO Inc. Downgraded to Hold Amid Revenue Growth and Strategic Challenges

DBS analyst Rachel Miu downgraded NIO Inc. to a Hold rating and set a price target of HK$38.00, citing a 19% YoY increase in vehicle revenue but also challenges due to a lower average selling price, weaker-than-expected guidance, and an anticipated increase in costs related to new stores, brand marketing, and R&D. Miu is a 4-star analyst with an average return of 17.9% and a 48.91% success rate.

On June 5, DBS analyst Rachel Miu maintained a Hold rating on NIO Inc. (NYSE:NIO) and set a price target of HK$38.00. The rating update came after the company reported its unaudited fiscal Q1 2025 results on June 3. The analyst stated that the company underwent a 19% year-over-year increase in vehicle revenue driven by a 40% rise in vehicle sales. However, lower average selling prices due to a change in the product mix are causing challenges for the company’s operations. Miu also reasoned that while NIO Inc. experienced a minute improvement in its vehicle margin, underperformance in fiscal Q4 2024 and weaker-than-expected guidance for Q1 2025 are anticipated to negatively affect its near-term performance. NIO Inc. plans to launch a number of new brands and models in 2025, including the ONVO L90 and Firefly. However, the analyst stated that the transition to a new vehicle platform may trigger inconsistent sales trends until the stabilization of the production process. The analyst thus expects the non-GAAP net loss for fiscal year 2025 to widen, prompted by the expected rise in costs associated with the new stores, R&D, and brand marketing [1].

Rachel Miu is a 4-star analyst with an average return of 17.9% and a 48.91% success rate. Her downgrade follows a string of price target reductions from other major banking institutions. On Tuesday, BofA Securities revised its price target for NIO stock to $4.30 from $4.90, maintaining a Neutral rating, citing the company’s Q1 performance and forward-looking guidance [4]. Similarly, Mizuho lowered its price target to $3.50 from $4, also holding a Neutral stance, pointing to intense competition in China’s EV sector as a key concern [2]. Macquarie followed suit, cutting its target to $3.90 from $4.70 while keeping a Neutral rating, noting that NIO’s Q1 results missed Bloomberg consensus and their own estimates across key metrics [4]. Despite these challenges, NIO’s stock showed resilience, opening at $3.63 on June 4, 2025, up $0.10 or 2.80% for the day.

NIO Inc. reported Q1 2025 revenue of $1.66 billion, a 21.5% year-over-year increase from $1.37 billion, fueled by an 18.6% rise in vehicle sales and a 37.2% surge in other revenue streams. However, the results fell short of the consensus estimate of $1.73 billion by approximately 4%. Profitability remains elusive, with an adjusted loss per share of $0.41, wider than the expected $0.35 and down 24.2% from the prior year [5]. The company’s gross profit margin improved year-over-year but remained below analysts’ expectations, with an operational loss of RMB 6.4 billion and a non-GAAP net loss of RMB 6.3 billion.

NIO's stock has been down by 22% this year and by about 32% over the past 12 months. Despite these challenges, NIO Inc. continues to innovate and expand its product lineup. The company recently announced a partnership with McLaren to develop and supply power batteries for the British supercar brand’s hybrid models [3]. This strategic move underscores NIO’s commitment to technology and sustainability.

In conclusion, DBS analyst Rachel Miu’s downgrade reflects the broader market sentiment towards NIO Inc. The company faces significant challenges in maintaining profitability and stabilizing its production process. However, its strategic partnerships and innovative product lineup provide a glimmer of hope for future growth.

References:
[1] https://finance.yahoo.com/news/dbs-maintains-hold-rating-nio-203322924.html
[2] https://stocktwits.com/news-articles/markets/equity/nio-gets-multiple-price-target-reductions-after-disappointing-q1-results/chkug2KRbwA
[3] https://cnevpost.com/2025/06/06/nio-to-supply-batteries-to-mclaren-report/
[4] https://finbold.com/banking-giants-update-nio-stock-price-target/
[5] https://site.financialmodelingprep.com/market-news/nio-inc-financial-challenges-ev-market-growth