NIO (NYSE: NIO) Races Past Ford’s Market Capitalization as the Bullish Sentiment Hits Fever Pitch
NIO (NYSE:NIO) has been on a tear since the pre-market session today, racking up sizable gains in the process. Now, in a manifestation of this phenomenal bull run, NIO has surpassed the market capitalization of the Ford Motor Company (NYSE:F) for the first time ever.
As of 13:30 EDT, NIO shares were trading at $26.46, corresponding to a market capitalization of $35.57 billion. At the same time, Ford shares were trading at the $7.60 price level, translating to a market cap of $30.24 billion. The chart below, sourced from Koyfin, illustrates this interesting dynamic.
So, what has spurred this 22 percent rally in NIO shares? Well, as we reported earlier today, JP Morgan analyst, Nick Lai, has set a new June 2021 price target of $40 for NIO shares, constituting an upside potential of over 51 percent relative to the current stock price level. Bear in mind that JP Morgan based this upgrade for NIO on its 3.0x Enterprise Value (EV)-to-Sales estimate for the year 2025. Interestingly, NIO is currently cheaper than Tesla (NASDAQ:TSLA) shares which trade at 5.1x the EV-to-Sales estimate for 2025.
In a crucial insight, JP Morgan now expects NIO to capture 7 percent of the wider EV market and 30 percent of the premium segment by 2025.
Additionally, in order to support its bullish outlook, the Wall Street behemoth identified three near-term catalysts for the NIO stock. These include the upcoming Q3 2020 earnings, expected to be announced by mid-November. The bank expects the Chinese EV player to expand its Gross Profit Margin (GPM) by 12 percent in the relevant quarter. Additionally, a strong backlog of orders is also expected to continue to act as a tailwind for the stock. As an illustration of this strong product demand, the wait time for the newly launched EC6 crossover is currently 8 weeks. Finally, the Wall Street giant expects NIO to debut a new sedan at the NIO Day, currently scheduled for December 2020. This will expand NIO’s product portfolio, currently consisting of the ES6 and ES8 SUVs as well as the EC6 crossover.
Of course, sentiment in NIO shares has been favorable through much of this year. However, it is the company’s growing production and delivery capacity that has truly supercharged investors. As an illustration, at the start of October, the Chinese EV player reported record delivery numbers for the month of September 2020. According to the pertinent press statement, NIO delivered 4,708 EVs in September, including 3,210 ES6s and 1,482 ES8s. Moreover, for the first time ever, the company also delivered 16 units of the EC6 model. This monthly delivery number marks an increase of 133.2 percent relative to the comparable month last year. Cumulatively, NIO has delivered 12,206 EV in the third quarter of 2020. Year to date, the company has delivered 26,375 vehicles.
Moreover, NIO’s plans for 2021 are equally grandiose. During an interview with a Chinese TV channel, NIO’s CEO Li Bin revealed that the company is leveraging its partnership with JAC Motors to increase its EV production capacity to 150,000 units in 2021. Crucially, however, the CEO also indicated that the company is planning to double this annual target run rate to 300,000 units, corresponding to a monthly production capacity of 25,000 units, by the end of 2021.