2024-04-16 12:53:45 ET
Summary
- We are downgrading our previous Buy rating to a Hold, with the NIO stock continually charting lower highs and lower lows, implying the lack of bullish support.
- This is despite the improving manufacturing scale, growing automotive gross margins, healthy balance sheet, and new mass market launch in H2'24.
- With consumers flocking to the 200K to 300K Yuan segment and EV competition/ price war intensifying, it remains to be seen when the pessimistic sentiments may reverse.
- Based on NIO's lower highs and lower lows over the past few quarters, it appears that the bears may have temporarily won the narrative here.
- With it remaining to be seen when the sell-off may end and bullish support may materialize, things are likely to get worse before they get better.
We previously covered NIO Inc. ( NIO ) in December 2023, discussing why we finally re-rated the stock as a Buy, thanks to its increasing ASPs, growing sales, improving automotive gross profit margins, and enhanced monetization strategies, concluding that these efforts were likely to moderate its cash burn rate....
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For further details see:
NIO: In Search Of A Bottom