NIO flawlessly stalls at $54.86 resistance.
NIO’s delivery data, as well as that of competitors Li Auto, Tesla, and XPEV, was impressive.
The price of the stock has retraced to the 9-day moving average.
On Thursday, NIO shares narrowly brushed up against our $54.86 barrier before retracing slightly to settle just above the short-term 9-day moving average on Friday, just before of the long weekend. With the revelations surrounding DIDI (read more) and the Chinese crackdown, however, certain headwinds have appeared for Chinese-listed companies over the weekend. Despite the fact that NIO is in an entirely different industry, investors may still be wary of Chinese stocks, as DIDI is down 20% in Tuesday’s premarket.
Since plunging to roughly $30 in May, NIO has steadily increased in value. Since then, the stock has steadily risen in pace with other industry peers, with Tesla in particular having a strong June. The stock has gained almost 23% in the last month, so the loss must be viewed in context. All Chinese electric vehicle manufacturers recently reported strong delivery numbers. LiAuto (LI) had a 166 percent YoY increase in June deliveries, XPeng (XPEV) had a 439 percent YoY increase in deliveries, and NIO had an almost 116 percent YoY increase in deliveries. BYD (BYDDF), the Warren Buffet-backed Chinese electric vehicle manufacturer, saw sales jump 102 percent year over year in June. Tesla (TSLA) also set a new milestone for vehicle deliveries in the first quarter of 2021, with over 200,000 units delivered. Despite worldwide semiconductor chip difficulties, all electric car manufacturers appear to be setting new sales records.
The problems with DIDI appear to come from concerns about data privacy and collecting, hence NIO and similar Chinese car stocks should be avoided. Indirectly, Chinese stocks may be shunned by investors until more clarification emerges. Investors are remained skeptical after the ANT Group IPO was canceled, with parent Alibaba’s (BABA) stock still trading at a discount to its peak.
Statistics from the National Institute of Health
Last 12 months Price/Earnings -83 Market Cap $79 billion
Price/Book 19 Enterprise Value $56 billion Price/Sales 25
Net Margin: 16 percent Gross Margin: 16 percent
Buy $54.89 based on the average Wall Street rating and price target
Is this a buy-on-the-dip opportunity? Since the stock failed to break through the $54.89 resistance, this could work. NIO has now retraced to the 9-day moving average, however because to the lack of volume, this zone is not a particularly strong support zone. I’d rather wait till the low $40s, given the volume profile here on the right of the chart plainly shows better volume-based support. The 200-day moving average is likewise near $42, adding to the zone’s strength. More volume equals more price haggling, more buyers and sellers, and hence more stability in this zone. Even a break of $54.86 isn’t a sure thing, since the volume profile shows a rise in volume above this level. Gains will be more difficult to achieve.
The bullish trend is maintained by holding the 9-day moving average, although the risk return is neutral in this author’s perspective. If you’re long, utilize a trailing stop to lock in some profits if the market retraces./n
