Beijing-based ride-hailing company DiDi Global’s (DIDI) abrupt delisting plans have made investors nervous, marking another low in the fraught U.S./China relationship. Against this backdrop, we think it could be wise to avoid Chinese electric vehicle maker NIO (NIO) and instead add domestic EV stocks Fisker (FSR), Faraday Future Intelligent Electric (FFIE), and Hyzon (HYZN) to one’s watch list. Wall Street analysts expect the shares of these companies to gain more than 45% in price in the coming months. So, read on.DiDi Global Inc.’s (DIDI) sudden decision to delist from the New York Stock Exchange (NYSE) less than six months after its listing surprised the market. The company’s decision highlights the deteriorating United States-China relationship.
Based in Shanghai, China, electric vehicle (EV) maker NIO Inc. (NIO) is known as the ‘Tesla (NASDAQ:TSLA) of China.’ The company delivered 10,878 vehicles in November 2021, representing a 105.6% year-over-year rise. Also, its revenues for the third quarter, ended September 30, 2021, increased 116.6% year-over-year to RMB9.80 billion ($1.54 billion), while its gross profit came in at RMB1.99 billion ($313.24 million), up 240.3% year-over-year. However, the stock has declined 16.2% in price over the past month and 30.1% year-to-date to close yesterday’s trading session at $34.05. NIO investors were spooked by fears of more delistings in the future. Furthermore, analysts expect its EPS to remain negative this year and next year. In terms of forward EV/S and P/S, NIO’s respective 9.35x and 9.64x are higher than the 1.48x and 1.20x industry averages. So, the stock looks overvalued, and we think it could be wise to avoid it now.
However, the EV industry is expected to grow significantly, with governments taking initiatives to transition their countries to a sustainable energy-driven future. According to a report by Valuates Reports, the global electric car market is expected to reach $476.73 billion by 2027, growing at a 25.3% CAGR. So, instead of betting on NIO, we think it could be wise to add the following domestic EV stocks to one watch list: Fisker Inc. (FSR), Faraday Future Intelligent Electric Inc. (FFIE), and Hyzon Motors Inc. (HYZN). They are likely to be less vulnerable to Chinese authorities’ regulations. In addition, Wall Street analysts expect their shears to soar more than 45% in price in the near term.