Nio’s stock has fallen by nearly 20% in the past year. It is now underperforming Chinese EV firms like Zeekr Intelligent and Li Auto. The stock was traded at $3.5, which is down 94% since its peak in 2021. Its market capitalization has fallen from $84billion to $6.7billion, losing billions in value.
Nio continues to grow, but faces challenges
Nio is a Chinese leader in electric vehicles. It faces substantial challenges which explain why the stock price has fallen over the last few years.
Recent results show that the company is growing rapidly. The company reported that its revenue increased by 21.5% to 12 billion RMB from the previous year.
Vehicle sales increased by 18.6%, to RMB 9,9 billion in the third quarter. It is an impressive performance, considering that companies like Tesla have reported poor financial results.
Nio’s sales of flagship vehicles were the main reason for its growth. The ONVO brand was also a major contributor to this growth.
It is expected that the company’s business in China will grow. This growth is attributed to its ONVO and Firefly brands, which were recently introduced.
Challenges remain
Nio faces many challenges in the coming year. There are indications that Nio is having difficulty meeting its production targets. This includes its ONVO line, where 20,000 units per month were expected since March. The company has not yet met its target.
ONVO delivered 6,281 cars in May, whereas Firefly only shipped 3,680. In May, Nio delivered 23,231 cars under its main brand. Nio has suffered from a poor performance, which is why its revenue and profit have been low.
Nio, and the other Chinese electric vehicle companies that are catching up with BYD in terms of price reductions is second. BYD has slashed the prices of many of its brands up to 34%. The Seagull Mini Hatchback costs $7,700.
Nio, and other companies will be negatively affected by price cuts made by BYD. They will need to raise their prices. Wei Jianjun – the Chairman of Great Wall Motors compared this crisis to Evergande – the collapsed giant real estate firm a few year ago. He stated:
The price war has been triggered by a certain carmaker who launched a significant reduction in prices. Many companies followed.
Nio has suffered substantial losses in this fiscal year. Recent data revealed that Nio’s adjusted loss increased to RMB 6,7 billion in the last year, a 30% increase.
Nio has been able to continue raising money through the sale of shares despite its loss. Nio sold 136,000,000 shares earlier this year to raise HK4 billion. The dilution of its shares has increased the number to 1,94 million from just 1.12 billion by 2020.
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Nio stock price analysis
Weekly chart shows that Nio shares have been in a narrow range for the last few months. The Average True Range has fallen because of this. ATR is one of most widely used volatility indicators.
The spread between Bollinger Bands’ three lines has also narrowed. This year, the accumulation and distribution indicators have continued to fall.
The stock is likely to remain within this range and go through the short squeeze this year. The next level to monitor will be $5.
The Nio share price is down: Is it still a great buy? This post may change as new information becomes available
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