TLDR
- Freedom Broker downgraded NIO stock from Buy to Hold but raised price target to $6.50 from $4.90
- NIO reported mixed Q2 results with strong delivery growth but revenue missing consensus estimates
- Average selling price decreased due to model lineup refresh, pressuring margins
- Q3 guidance came in below Wall Street forecasts despite expected delivery growth of 41-47%
- Stock has gained nearly 50% over six months but analyst warns of limited near-term upside
NIO stock faced a rating downgrade this week as Freedom Broker moved the Chinese electric vehicle maker from Buy to Hold. The downgrade came despite the firm raising its price target to $6.50 from $4.90.
The stock currently trades at $6.32 after posting gains of nearly 50% over the past six months. Freedom Broker analyst Dmitriy Pozdnyakov made the rating change following NIO’s mixed second quarter results.
NIO reported Q2 revenue of $2.65 billion, marking a 9% increase year-over-year. However, this figure fell short of the consensus estimate of $2.73 billion.
The company delivered 72,056 vehicles in the second quarter, representing growth of 25.6% from the previous year. Vehicle deliveries reached 72,000 units overall for the quarter.
Adjusted earnings per ADS came in at $0.32, slightly beating the forecast of $0.31. The delivery growth received a boost from initial sales of NIO’s new FIREFLY sub-brand.
Pricing Pressures Weigh on Margins
Despite the delivery growth, NIO experienced a decrease in average selling price during the quarter. Pozdnyakov attributed this decline to the renewal of the company’s model lineup.
The refresh of NIO’s vehicle models has put pressure on margins as pricing power weakened. This pricing dynamic has created headwinds for the company’s profitability outlook.
The analyst noted that while volumes are rising, weaker pricing presents challenges for earnings recovery. Margin pressure remains a key concern as the company navigates its model transitions.
Third Quarter Guidance Disappoints
NIO’s guidance for the third quarter fell well below Wall Street expectations. The company expects to deliver between 87,000 to 91,000 vehicles, representing growth of 41% to 47%.
Revenue projections came in at $3.04 billion to $3.19 billion for Q3. This represents an increase of 16.8% to 22.5% from the prior year period.
However, these forecasts came in below consensus estimates from analysts. Pozdnyakov highlighted this guidance shortfall as a key factor in the downgrade decision.
The softer outlook suggests profitability will remain under pressure in the near term. Limited upside potential appears likely until pricing stabilizes.
Other analysts have also weighed in on NIO recently. Bernstein raised its price target to $5.50 while BofA Securities set a target of $7.10.
Mizuho increased its target to $6.00 citing positive delivery growth expectations. US Tiger Securities raised its price target to $8.00 with a solid outlook for the second half of 2025.
On TipRanks, NIO maintains a Moderate Buy consensus rating. This rating is based on six Buy ratings, six Hold ratings, and one Sell rating.
The average price target stands at $5.90, implying 3.75% downside from current levels. NIO stock has surged 40.6% year-to-date despite recent volatility.
NIO disclosed 31,305 vehicle deliveries for August 2025 in a recent SEC filing. The company continues to report monthly delivery figures as it scales production.
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