Investment bank Bernstein has never been a huge fan of Chinese electric car company Nio (NYSE: NIO). Bernstein's latest move on the EV stock, however, looks downright pessimistic.
Since initiating coverage of Nio stock back in 2021, Bernstein has commented on Nio's valuation nearly a dozen times, according to data from TipRanks.com. Each time, the banker recommended that investors hold the stock. (Word to the Foolish: On always-optimistic Wall Street, when an analyst tells you a stock is a "hold," you are best advised to translate that as meaning: "don't necessarily sell, but definitely don't buy").
On Thursday, however, Bernstein did something a little bit different.
Is Nio stock a sell?
Reiterating her hold rating on Nio, Bernstein analyst Eunice Lee slashed her price target on the Chinese automaker by a whopping 27%, from $7.50 per share to just $5.50. The stock, trading at $5.74 a share, is already near that new target.
Some of the reasons for this price target cut were obvious. A putative growth stock, Nio's Q4 sales actually inched up only 3.6% year over year, and the company lost $789 million. (Nio has, by the way, never earned a profit). What's really concerning in Lee's note, however, is her observation that the company's market share in electric vehicles has fallen by more than half since it first set up shop, skidding from 5% in early 2021 to just 2% in recent months, despite Nio more than doubling the number of EV car models it produces (from three to eight).
With sales stalled, profits nonexistent, competitors getting stronger, and its own market share vanishing, Nio's future seems uncertain in the extreme. The only real question now is: When will Lee admit that Nio stock is no longer a hold, but actually a sell?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nio. The Motley Fool has a disclosure policy.
