NIO surges after HSBC upgrade on first quarterly profit
Analyst sees 23% upside as Chinese EV maker targets full-year profitability with 10 new models
Nio Inc shares rose 1.5% on Friday after HSBC upgraded the Chinese electric vehicle maker to Buy from Hold, setting a price target of $6.80 that implies 23% upside from the current price. The upgrade follows NIO's report of its first quarterly net profit in company history, a milestone the bank said validates the company's turnaround strategy.
The Shanghai-based automaker recorded net income attributable to shareholders of RMB 122.4 million ($17.5 million) for the fourth quarter of 2025, according to earnings results released March 10, 2026. The profit marked a dramatic reversal from a RMB 7.13 billion loss in the same period a year earlier and exceeded analyst expectations that had projected continued losses through 2025.
"The achievement of first quarterly net profit demonstrates the company's operational improvements are gaining traction," HSBC analysts wrote in a research note reported by CNBC. The bank raised its price target to $6.80 from $4.80, reflecting increased confidence in NIO's path to sustainable profitability.
The quarterly profit was driven by record deliveries and improved margins. NIO delivered 124,807 vehicles in the fourth quarter, up 71.7% year-over-year, while revenue surged 75.9% to RMB 34.65 billion ($4.95 billion). More importantly for investors, the company's vehicle gross margin expanded to 18.1% from 14.7% in the previous quarter and 13.1% in the fourth quarter of 2024.
NIO now plans to launch approximately ten new and upgraded models across its three brands in 2026 as it targets full-year Non-GAAP operating profitability. The premium NIO brand will introduce several refreshed models in the first half, while the mass-market Onvo brand is expected to debut the L80, a large five-seat SUV, in mid-May with deliveries shortly thereafter. The Firefly brand, focused on small, premium urban EVs, launched in Thailand on March 5, 2026, marking its second right-hand drive market after Singapore.
The upgrade from HSBC comes as the broader electric vehicle sector faces headwinds. Global EV sales reached 1.1 million units in February 2026, down 11% from the same month a year ago, with declines in North America and China offsetting growth in Europe, according to industry data. Despite near-term softness, the global EV market is projected to grow from $506.12 billion in 2026 to $1.22 trillion by 2034, representing a compound annual growth rate of 13.4%.
NIO's stock, which closed at $5.55 on March 13, 2026, has gained 17.6% over the past seven days and 8.0% year-to-date, according to market data. The shares remain well below their 52-week high of $8.02, set earlier in the year, reflecting lingering investor skepticism about the company's long-term prospects.
Analyst sentiment on NIO is mixed but improving. The consensus average target price stands at $6.43, with the ratings distribution split across Strong Buy (3), Buy (11), Hold (10), Sell (1), and Strong Sell (1), according to market data. HSBC's upgrade adds weight to the bull case, particularly if the company can sustain its margin improvements and meet delivery targets for its new model lineup.
Key risks include intensifying competition in China's EV market, where domestic rivals like BYD and international automakers are flooding the market with new models. NIO's premium pricing strategy also faces pressure from a price war that has engulfed the Chinese auto industry over the past two years. Additionally, the company's significant cash burn rate, though improving, remains a concern for some investors.
Looking ahead, investors will focus on NIO's first-quarter 2026 delivery numbers and progress toward its full-year profitability target. The company's ability to successfully integrate its three-brand strategy—spanning premium NIO, mass-market Onvo, and urban-focused Firefly—will be critical to sustaining the momentum that has begun to build following its historic quarterly profit.