NIO Wins UBS Rating Upgrade on Equity Raise and Product Launch Momentum

UBS believes that with an improved capital structure and the launch of new models, NIO is likely to reach breakeven on a non-GAAP basis in Q4 this year.

On September 16, UBS raised its rating on NIO Inc. from “Neutral” to “Buy,” lifting the target price from $6.20 to $8.50.

The brokerage noted that NIO’s recently launched models, including the ONVO L90 and NIO ES8, are driving sales growth, while the company’s latest equity financing has helped ease concerns among investors and consumers about its long-running losses.

Just last week, NIO completed the issuance of 181.8 million Class A ordinary shares, including American Depositary Receipts (ADRs). The public offering was priced at $5.57 per share, or HK$43.36 in Hong Kong, raising $1 billion in equity capital.

Following the financing, NIO’s share price climbed for four consecutive days. Some investors booked paper gains of nearly HK$12.94 per share, representing a return of 29.84% in the short term.

Over the past decade, NIO has accumulated losses exceeding RMB 100 billion ($14.04 billion), a drag on consumer confidence. UBS, however, expects the improved capital structure and product rollout to position NIO for a non-GAAP break-even in the fourth quarter of this year.

Particularly, the ES8—starting at RMB 416,800 ($58,525)—is expected to lift overall revenue and margins, while also giving NIO an average selling price advantage over XPeng. Citing dealer checks, Deutsche Bank said that the ES8 has already received about 100,000 cancellable orders to date.

UBS forecasts NIO’s fourth-quarter revenue growth will outpace XPeng by roughly 50%.

Nevertheless, NIO’s market capitalization still trails XPeng’s by about 25%. UBS anticipates the valuation gap will narrow as losses shrink and margins improve.

The bank also raised its revenue forecasts for NIO in 2025 and 2026 by up to 36%, projecting the company will generate positive free cash flow in 2026. By the end of 2025, UBS expects NIO to hold a net cash balance of RMB 21 billion ($2.95 billion).

Capital market reactions have been upbeat. On September 17, NIO’s Hong Kong-listed shares (09866.HK) jumped more than 11% intraday, closing at HK$56.90—a year-to-date high.

In the U.S., NIO (NIO.US) rose 8.17% overnight to $7.02, also hitting its highest level so far this year.