Penny Stocks with Huge Potential: China’s EV Maker NIO

penny stocks

When shares sell for under $5, investors often raise a skeptical eyebrow. It’s simple really; falling into penny stocks territory often spells a certain death for companies.

But where’s the fun in assuming that all penny stocks are cheap for a reason? Some are, but many are not. Companies do make breakthroughs, do navigate through a rough patch, and do climb the ladder. Those that do all three bring investors with them.

So we’re checking out China’s EV-maker NIO Inc (NYSE:NIO)—a potential for investors looking for opportunities overseas.

Penny Stocks Overseas

Is NIO the Tesla (NASDAQ:TSLA) of China? No, but it often draws the comparison. Where TSLA shares are worth roughly $258 USD, the NIO penny stock is a meager $5 at present. Plus NIO is a little further behind Tesla, with only one car model currently on the market and only one year of car deliveries under its belt.

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So no, NIO is not the Tesla of China.

Not yet anyway.

Penny Stocks: Q4 Earnings Report

Shares of the electric car maker recently dipped below the $5 mark after it returned disappointing guidance in its Q4 earnings report. The results affected the NIO penny stock so badly that it subsequently lost over 50% in value.

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However, external factors played a major role in NIO’s poor performance:

  • Car sales in China have begun to decline for the first time in two decades;
  • There is fear of an economic downturn ahead;
  • The government has cut an EV subsidy it had previously created in 2017 to encourage EV sales.

Penny Stocks Offering Long-Term Opportunity

Though the short-term may see this stock continue to suffer, there is a long-term opportunity for electric vehicle makers that can’t be ignored—especially in China where cities are notorious for air pollution.

The overall picture remains positive. Last year, EV sales rose by 62% and further, the government has set a target that 20% of all car sales in the country should be electric vehicles by 2025. With the entire globe moving towards sustainable, emission-free transport, this recent dip can easily be considered a rough patch. Surely, NIO’s future is bright.

A second car is on the way, and with this penny stock trading for $5 at present, investors have a huge potential here for a very low price.

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Featured Image: DepositPhotos © kasto

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