As NIO Eyes Adjusted Operating Profit in Q4, Is the Stock a Buy Now?

Chinese electric vehicle (EV) company NIO Inc. NIO is finally showing early signs of a long-awaited turnaround. After years of heavy losses, the company has guided for its first-ever quarterly adjusted operating profit for the fourth quarter of 2025. NIO expects adjusted operating profit between 700 million and 1.2 billion yuan, implying a sharp reversal from the 5.54 billion yuan adjusted operating loss reported in the fourth quarter of 2024.

The improvement is being driven by a combination of strong delivery growth, a better product mix, and tighter operational discipline. NIO has been broadening its addressable market by expanding beyond its premium roots. The launch of the more affordable Onvo brand, alongside the high-end small-car brand Firefly, is helping the company attract new customers and generate incremental volume in a highly competitive EV market.

Fourth-quarter deliveries reached a record 124,807 vehicles, up nearly 72% year over year, with all three brands posting quarterly highs. The core NIO brand delivered 67,433 units, while Onvo contributed 38,290 units and Firefly added 19,084 units.

By contrast, delivery momentum at close peers was less impressive. Li Auto’s LI fourth-quarter 2025 deliveries fell to 109,194 units, down sharply from 158,696 units a year earlier. XPeng XPEV delivered 116,249 vehicles, up 27% year over year but still below the lower end of its own guidance.

Year to date, NIO shares have fallen 4% and now trade below $5. While the stock has lagged Li Auto and the broader industry, it has outperformed XPeng over the same timeframe.

YTD Price Performance Comparison

Let’s delve deeper into the stock to assess whether it’s worth buying at current levels.

Expansion Efforts, Margin Gains & Battery Swap Edge Aid NIO

NIO appears positioned for a stronger growth phase, supported by multiple tailwinds across products, margins, technology and global expansion.

NIO offers one of the broadest lineups among Chinese EV makers, spanning models such as the ES6, ES8, ET5, ET7, EC6, EC7, and newer offerings under the Onvo and Firefly brands. This wide portfolio allows NIO to address different price points and customer segments. Deliveries reached 326,028 vehicles in 2025, up nearly 47% year over year, with demand coming from all three brands. Momentum has carried into 2026, as January deliveries jumped 96% year over year to 27,182 units, led by the third-generation ES8 SUV. Notably, NIO has now surpassed 1 million cumulative deliveries, a key scale milestone.

Margins are also trending in the right direction. As volumes ramp up and supply-chain costs improve, NIO’s vehicle margin rose to 14.7% in the third quarter of 2025, up from 13.1% in the corresponding quarter of 2024. The company plans to launch three new large SUVs this year, all positioned at the premium end of their segments. These models are expected to deliver stronger margins and benefit from cost synergies with the updated ES8 and L90 platform. Management is targeting an overall vehicle margin of 20%.

Battery swap technology adds a unique competitive edge. NIO’s Battery-as-a-Service strategy continues to differentiate the brand. The company has completed over 100 million battery swaps since 2018 and operates 3,790 swap stations globally, with plans to add 1,000 more by the end of 2026. Partnerships with CATL and others could further standardize battery swap models in China.

Finally, global expansion and software upgrades provide additional upside. The company recently entered Central Asia with its first store in Uzbekistan and plans to launch its Firefly sub-brand in Australia and New Zealand in the second half of 2026. Europe remains a key focus, with five models set to roll out across markets such as Portugal, Greece, Denmark and Bulgaria. At the same time, NIO continues to enhance its software capabilities. The latest NIO WorldModel upgrade improves assisted driving, parking, and active safety features and has already been rolled out to more than 460,000 vehicles, strengthening user experience and brand stickiness.

Worth Buying NIO Shares at Current Levels

NIO’s outlook has improved meaningfully as the company gears up for its first quarterly adjusted operating profit. Delivery momentum is strong, margins are trending higher, and strategic initiatives such as multi-brand expansion, battery swap infrastructure, and software upgrades are beginning to pay off. From a valuation standpoint, the stock also appears attractive, trading at a lower price-to-sales multiple than the broader industry.

Based on price targets from 14 analysts, NIO has an average target of $6.17, implying roughly 26% upside from current levels.

Risks persist, particularly intense competition from Tesla, BYD, Li Auto, and XPeng, as well as balance-sheet pressure. NIO’s elevated debt-to-capital ratio of 0.82 limits financial flexibility and remains a key overhang.

Even then, the company’s strategic execution is gaining traction and profitability visibility is improving. As such, the risk-reward appears favorable at current levels, supporting a Zacks Rank #2 (Buy) for the stock.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for NIO’s 2026 top and bottom lines implies a year-over-year improvement of 57% and 60%, respectively.

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This article originally published on Zacks Investment Research (zacks.com).

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