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Nio stock price forecast ahead of earnings: buy, sell, or hold?

By: Invezz

Nio stock price will be in the spotlight this week as the Chinese electric vehicle (EV) company publishes its financial results. The stock has been moving sideways in the past few weeks and was trading at $5.78. It has dropped by more than 64% from its highest point in 2023.

Nio earnings ahead

Nio, like other EV companies, have been in trouble in the past few months as demand has eased drastically around the world.

The biggest challenge that the industry is facing is low margins and significantly higher inventories as companies increase production.

Chinese EV companies, in particular, have used government incentives to pump millions of low-priced EVs around the world.

The concern is that this overproduction will continue to affect margins and the profitability that these companies gain. China could affect the EV industry as it did in the solar panels and steel industry. 

Further, there is an issue that the Chinese market is now oversaturated and that companies like Nio will need to get foreign markets to gai market share.

Nio has already started selling its vehicles in Europe but the reception in key markets like Norway has been relatively muted.

Therefore, this week’s results will provide more colour about the state of the company as the industry goes through major shifts.

The most recent report showed that Nio delivered 8,132 vehicles in February. Most of these vehicles were premium smart electric SUVs followed by premium electric sedans. In all, the company has now delivered over $467k vehicles.

Analysts expect that Nio’s revenue will report over $2.34 billion in revenue, a slowdown from the previous quarter’s $2.67 billion. Nio’s revenue in the same quarter in 2022 stood at over $2.34 billion. 

In addition to the headline figures, traders will react to the company’s margins, which have come under pressure lately. Its gross margin came in at just 8% in the last quarter. 

Other EV companies like Rivian and Lucid Motors have all published weak results while Fisker is on the verge of bankruptcy unless Nissan swoops in.

Nio stock price forecastnio stock

NIO chart by TradingView

The daily chart shows that the Nio share price has moved sideways in the past few weeks. This price action means that the downtrend has lost momentum. It remains below the important support level at $7, its lowest point in May and December last year.

Nio has remained below all moving averages, signalling that bears are still in control. On the positive side, the Klinger Oscillator has pointed upwards. 

The stock has also formed a bearish flag pattern. Therefore, in my opinion, I believe that the Nio stock price will soon have a bearish breakout in the coming days. If this happens, the next point to watch will be at $5.0. A move below the support at $5 will point to more downside. On the other hand, a move to the resistance at $7 can not be ruled out.

The post Nio stock price forecast ahead of earnings: buy, sell, or hold? appeared first on Invezz

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