What happened
Actions of NIO (NYSE: NIO) rose 1,110% in 2020, according to data from S&P Global Market Intelligence. The shares of the Chinese electric vehicle (EV) company skyrocketed thanks to signs of incredible momentum and long-term growth potential for the industry.
NIO data by YCharts
The momentum of NIO’s actions increased amid signs that the Chinese government would make a powerful push to transition the country to electric vehicles. The company also released strong vehicle delivery numbers, and its monthly delivery updates over the past year have shown impressive growth for the business.
Image source: NIO.
And
NIO delivered 7,007 vehicles in December (an increase of 121% year-over-year), bringing the company’s total delivery count for the year to 43,728. Its vehicle delivery count for 2020 represented an annual increase of about 112.6%.
Government subsidies for EV buyers helped to accelerate industry growth in China and contributed to a substantial boost for NIO. Purchasing subsidies were also linked to performance metrics that should correspond to reducing pollution, and NIO vehicles generally performed well in the relevant categories. However, China’s Ministry of Finance recently cut subsidies by 20% for 2021 in response to signs of improvement in the adoption of organic EVs, and it remains to be seen how this could impact momentum in the short term.
What now
NIO’s shares continued to show gains in early 2021. The company’s share price has risen by about 12% in the January trading so far.
NIO data by YCharts
China has a population of approximately 1.4 billion people, presenting a huge addressable market for NIO only in its domestic market. The EV market has been expanding even faster in China than in the United States, and there is still a great deal of room for growth. However, investors should also keep valuations in mind – as well as the likelihood that an influx of competition could limit growth opportunities for industry leaders who have enjoyed explosive stock gains.
NIO has a market capitalization of approximately $ 84.6 billion and is valued at approximately 18 times this year’s expected sales.