What are the key levels for Nio stock? Technical Analysis by C.Afonso

by C. Afonso

The rise of the Interest rates, the recent Inflation data and the lost of the Long Techinal Support of the U.S. Indexes are some of the main reasons for this recent Market pullback. Last week, the S&P and Nasdaq suffered their worst week since the pandemic began, tumbling 5.7% and 7.55%, respectively. Also the recent Inflation Data — the CPI (consumer price index) increased at a 7% YoY pace last month, a step up from the 6.8% rate registered in November and the largest jump since June 1982.

Source: Refinitiv

Last week, stocks capped their worst week in nearly 2 years with another round of intense choppy trading on Friday. S&P 500 tumbled below its 200-day moving average, a level of support that had held up since May 2020. Both the S&P and Dow closed out their 3rd straight week of losses, down 5.7% and 4.6% respectively, while the Nasdaq Composite plunged 2.7% Friday and 7.6% for the week, its worst weekly decline since the Pandemic related drop, in March 2020. Nasdaq went further in correction territory, being now down more than 14% since its November high.

The EV Sector leader, Tesla, is currently down almost 11% year-to-date even after presenting the Deliveries Report 12% above Wall Street expectations with 936,172 vehicles delivered last year.

Nio Overview

On January 21th, 2022, the Luxury Chinese EV maker hit a new 52 Week Low at $27.23. Despite the recent catalysts, share price is 55.85% down in the last 12 months and almost 14% down year to date.

Nio’s share price reach its All-Time-High on January 2021 at $66.99. At the time, Nio held the NIO Day 2020 and released a new Sedan Model, the NIO ET7. The stock had an amazing year of 2020 (even with the Covid-19 pandemic effects) but has been struggling since then. The company is currently much more solid and well stablished than it was an year ago, although the stock is trading 55% lower than then.

Resistance Areas

On the 4h Chart, we can see that the stock tried to break the long downtrend twice during the last months. The last one was during the first days of November 2021. Since October 2021, the stock had 5 weeks where it jumped more than 33% — from $33 to $44 — but it didn’t wasn’t enough to break the bearish trend at $45.50 area. In order to break the downtrend drawn on the chart, $NIO has to climb 36% to reach the $37 area, the main mid-term target.

The next Short-term key levels are at $28.49, $29.62 and $30.26.

Support Areas

As previously said, the stock broke yesterday the $27.52 support and has now the next Support Pivot Points at $26.72, $26.08 and $24.95. On the Bearish View, there’s also a gap that could be filled between $21 and $23.50, which I consider only an hypothetical chance as long as the share price remains higher than the $24.95 key point.

Insitutional Ownership
Source: Fintel

Nio’s Institutional Ownerships remain at the highest level with a total of 533,520,389 shares. On January 2021, when the stock was being traded at All-Time-High levels ($66.99), there were less Institutions owning Nio stock comparing to these days indicating a strong belief in the Chinese EV maker from the Institutions.

Catalysts for 2022

For this year, the main catalysts are the expansion to another 4 European countires (Germany, Denmark, Sweden and The Netherlands); ET7 deliveries beginning on March 28th, a new SUV model (ES7) in Q2/ Q3 and its deliveries in Q4, 1300 Battery Swap Stations by the year end and the start of the ET5 Model deliveries next September.

Nio will start the ET7 Model deliveries on March 28th. The model was announced during NIO Day 2020 – held in January 2021 – and has been highly expected by customers and investors. Orders started this week but, unfortunately, the company didn’t mentioned the orders numbers yet. Test drives are planned to start on March 5th.

On their Q3 report, Nio said that their Vehicle Margin in the third quarter of 2021 was 18.0%, compared with 14.5% in the third quarter of 2020 and 20.3% in the second quarter of 2021. The increase of vehicle margin compared to the third quarter of 2020 was mainly driven by the higher average selling price, as well as lower material cost. 

The decrease of vehicle margin compared to the second quarter of 2021 was mainly driven by the increased financing at subsidized rates for vehicle purchases which resulted in a deduction of vehicle revenue and an increase in tooling depreciation cost.

During last December, NIO delivered +10k vehicles for the second month in a row (130,000 Annual Sales pace). William Li, CEO of NIO, said that the 100% Deliveries growth Year-over-year “is expected to be maintained that pace in 2022” which means the company will deliver +180,000 vehicles according to the expectations.