Not all growth stocks recover from a catastrophic fall. But every now and then, a rare exception emerges. And having surged by more than 50% in the last 12 months, Nio (NYSE:NIO) shares could be one of these exceptions.

However, even with all this recent momentum, the stock is still a staggering 87.9% below its 2021 peak… roughly five years ago.

So is this new energy the start of a genuine recovery rally? And should I be considering buying shares today?

What does Nio actually do?

As a quick reminder, Nio’s a Chinese electric vehicle (EV) manufacturer that’s competing directly with Tesla in the premium EV space. But what sets it apart is its battery-as-a-service model. Rather than waiting at a charging point, drivers can swap a depleted battery for a fully charged one in under five minutes at one of Nio’s growing network of swap stations.

It’s a genuinely differentiated proposition in an increasingly crowded market. And it’s not hard to see why investors got excited when the company started making waves five years ago.

From peak to trough… and back again

While Nio was making significant strides, its 2021 share price peak was driven mostly by pandemic-era euphoria around EV adoption rather than established fundamentals. In other words, investors were pricing Nio shares as if the company had already reached market dominance.

What followed was a brutal reality check. A combination of US-China trade tensions, intense domestic price wars sparked by BYD and Tesla, rising losses, and a global EV demand slowdown burst the bubble, wiping out nearly 90% from the firm’s valuation.

Skip ahead to 2026, and the recent recovery reflects a meaningful shift in the underlying story. Nio’s vehicle deliveries have started accelerating sharply, with the company posting record quarterly figures in late 2024 and into 2025.

The launch of its more-affordable Onvo sub-brand has dramatically expanded its addressable market beyond premium buyers. And easing trade rhetoric between Washington and Beijing has started removing some of the geopolitical overhang that’s weighed heavily on US-listed Chinese companies in recent years.

So is now the time to think about buying?

What’s the verdict?

Institutional bulls point to Nio’s expanding delivery volumes, its unique battery swap infrastructure spanning a network of thousands of stations, and the enormous long-term runway of EV adoption across Asia and Europe.

Throw in the fact that its Onvo brand is beginning to scale, and the path to profitability looks more credible today than at any point in the company’s history.

Having said that, the jury’s still very much out on whether or not Nio can catch its rivals. The company continues to burn through cash, while rivals such as BYD command significantly more powerful economies of scale advantages that are difficult (although not impossible) to replicate.

So where does that leave investors today? Personally, I think Nio still looks like a risky investment even at today’s massively lower share price.

The company has some real momentum with an intriguing, unique spin to differentiate its business model. But whether or not battery swapping’s enough to lure customers away from other EV brands remains to be seen.

For now, I’m keeping this growth stock on my watchlist. Luckily, there are plenty of other exciting growth opportunities for investors to explore.

Should you invest £5,000 in Nio right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Nio made the list?

Zaven Boyrazian does not hold any positions in the companies mentioned.