Nio stock price analysis: could jump by ~80% unless this happens

by The Empire Trading

Nio (NYSE: NIO) stock price has been dead money for a while now. The shares were trading at $8.40 on Tuesday, where it has been stuck at in the past few months. This price is about 87% below the highest point in 2022. So, is it safe to buy Nio?

Nio has some catalysts

Nio share price has been in a strong sell-off in the past few months. This decline happened as investors remained concerned about the electric vehicle industry. Indeed, most EV stocks like Rivian, Lucid, and Mullen Automotive have all crashed hard in the past few months. 

The main reason why Nio stock price is crashing is that the company is seeing slow growth in China, its primary market. Further, the level of competition in the industry has jumped sharply. In addition to well-known companies like Byd, SAIC, Xpeng, and Li Auto, there are now tens of EV companies in China.

Despite all this, there are some potential catalysts for Nio. First, analysts believe that Nio will become breakeven in the next few years. Precisely, analysts expect that the firm will make its next annual profit in 2026, earlier than other EVs. They also expect that the firm’s revenue will be $12 billion this year and $59 billion in 2032.

Second, despite the competition, Nio has a good market share in China, where it is seen as a viable alternative to Tesla. Most importantly, its SUV business is seeing traction in the country. The most recent result showed that the company delivered 6,658 vehicles in April, a 31% increase from the same month in 2022. It had delivered 10,378 cars in the previous month.

Third, Nio hopes to grow its market share abroad. In April, the company announced that it will build a new plant to build cars for the European market as it faces stiff competition in China. Global expansion could be a good thing for the company. However, I suspect that European buyers will still go for European EV brands.

Nio stock price forecast

NIO chart by TradingView

So, is it safe to buy Nio stock? Turning to the daily chart, we see that the Nio share price has been in a steep sell-off in the past few months. Recently, however, it seems like the shares have started bottoming after finding a strong support at $8. It has failed to move below this support several times this year.

Therefore, I suspect that the stock will bounce back in the coming months. If this happens, the stock will retest the key resistance point at $13.72, which is about 80% above the current level. A break below the year-to-date low of $7.45 will signal that there are still more buyers in the market.

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