Nio stock price analysis: a rude wake up call

by

Nio (NYSE: NIO) stock price dived by more than 10% on Wednesday as concerns about Chinese electric vehicle companies continued. The shares plummeted to the key support level at $7.6, where it has struggled moving below recently.

Xpeng results fallout

Nio was not the only EV stock that plunged on Wednesday. As I wrote here, Xpeng share price plunged by more than 10% while BYD fell by 2.50%. Li Auto shares declined by about 1%. To be fair, American EV stocks like Mullen Automotive, Tesla, and Faraday Future also slipped.

The main reason why Nio shares plunged was a relatively weak financial report by Xpeng. In a statement, the company said that its total revenue plunged in the fourth quarter. The same is true for other metrics like the number of deliveries and gross margins. Most importantly, the company issued a weak forward guidance.

Therefore, while Nio did not publish its financial results, analysts believe that the company is guilty by association. Besides, the two companies operate in the same industry and target the same customers. As a result, these results are signs that Nio is also not doing well.

These results, together with those of other Chinese EV companies, show that the industry is slowing. Analysts believe that Nio’s upcoming results will show that the company’s revenue came in at $1.68 billion in the first quarter from the previous quarter’s $2.38 billion. The company’s revenue came in at $1.48 billion in the same quarter last year. 

In the previous quarterly results, Nio said that its losses widened and then issued a softer forward guidance. Its margins also thinned in what the management attributed to a decline in vehicle and sales margin.

The biggest challenge for Nio is that the company primarily sells its vehicles in China, a market that is highly saturated. While Nio hopes to sell its cars overseas, the process will take time and there is no guarantee that it will succeed.

Nio stock price forecast

Nio shares by TradingView

Nio share price has been in a strong bearish trend in the past few months as concerns about the company remain. It remains below the descending trendline shown in black. This line connects the highest levels since January this year.

Further, the shares remain below the short and longer-term moving averages, signaling that bears are still in control. Therefore, I suspect that the shares will likely continue falling ahead of the company’s earnings that are scheduled on June 9th.

The post Nio stock price analysis: a rude wake up call appeared first on Invezz.

You may also like