NIO - Nio stock price forecast: outlook as the plot thickens

2024-03-27 07:51:29 ET

Nio (NYSE: NIO) stock price continued its remarkable collapse after the electric vehicle company warned about its deliveries. It crashed by almost 4% in the pre-market, reaching its lowest level since June 2020. It has been one of the worst-performing EV stocks as it tumbled by more than 92% from its highest point in 2021.

Nio deliveries warning

Nio share price continued collapsing after the company downgraded its deliveries outlook. In a statement, the firm warned that it will deliver about 30,000 vehicles in Q1. It had previously guided to deliver between 31k and 33k vehicles.

Nio’s report came a day after BYD delivered a weak financial report even as the company overtook Tesla in China. Its profit jumped by 81% in 2023 to $4.16 billion missing the estimated $4.20 billion.

The biggest challenge that Nio is facing is that the Chinese market has gotten highly saturated. There are now over 100 EV companies in the country. Some of them are well-known brands like Xpeng and Li Auto.

Huawei, one of the biggest Chinese technology companies, also runs Aito brand, which has continued to gain market share. A recent report showed that Aito’s M7 model was the fourth best-selling EV in China behind two BYD models and Tesla’s Model Y.

The rising competition is having a major impact on Nio and other companies. For one, companies have been forced to slash prices in a bid to boost their sales. The impact is that their margins are not growing.

Recent financial results revealed that Nio was not growing. Its revenue rose by just 1.62% in the fourth quarter to $2.38 billion. Its gross margin came in at 7.5%, down from 8.0% in the third quarter. At its peak, Nio had higher gross margins than this.

The other challenge is that Nio is not having a lot of success in the international market. In a statement in 2023, Nio’s CEO lamented that the company’s sales were not meeting expectations in key European markets.

Most importantly, there are signs that used EVs are depreciating at a fast pace, especially in the United States. The same is happening in China, a highly saturated market.

Nio stock price forecast

NIO chart by TradingView

The weekly chart shows that the Nio share price has been in a downtrend after peaking at $67.04 in June 2021. All attempts to buy the dip have not worked out well. The stock recently plunged below the crucial support level at $6.87, its lowest level in May 2023. This price was also the neckline of the head and shoulders pattern.

Nio stock price has remained below all moving averages while oscillators like the MACD and the Chaikin Oscillator have all pointed downwards. Therefore, the outlook is extremely bearish, with the next point to watch being at $1.13, its lowest point in 2019.

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