Nio stock price remains in a bear market this month as concerns about the Chinese EV industry continue. It dropped to $3.50 last week, its lowest level since July last year and 55% from its highest point this year. The focus now is in a major deal between Nio and Geely, one of the top automakers in China.
Nio stock has slumped amid China EV challenges
The ongoing Nio stock retreat has coincided with that of other top Chinese companies. Xpeng stock dropped to $10.12 on Friday, down by over 60% from the year-to-date high and its lowest level since September 2024. It has dropped by 76% in the last five years.
Li Auto also dropped to $11.50 from the year-to-date high of $20, while Polestar fell to $6.93, down by 70% from its peak this year. Most notably, BYD, the biggest automaker in China, has also been in a freefall this year.
These stocks are falling as investors assess the industry’s growth trajectory amid intensifying competition and as the Chinese government removes some incentives. In a statement when releasing its numbers, BYD said that the industry was getting highly competitive, while the cost of doing business was soaring.
Nio, on the other hand, has been in a better position than other Chinese EV companies. Its revenue growth has continued, driven by its unit sales. Its last earnings report showed that its vehicle deliveries rose to 107,658 from 72,056 in the same period last year.
Nio’s vehicle revenue jumped to $4.28 billion, up by 80% from the second quarter. Its vehicle margin also rose to 18.5%, higher than Tesla’s 16.3%. As a result, its gross profit rose to $870 million. Its net loss came in at $77.8 million, driven by share-based compensation. Nio also has a strong balance sheet, with its cash and equivalents rising to over $8.4 billion.
Looking ahead, the next important data to watch will be its September and Q3 delivery numbers that comes out later this week. It has guided to its Q3 deliveries coming at between 108,000 and 111,000, representing a 25% annual growth.
READ MORE: Nio stock crashes on weak outlook despite EV delivery surge: now what?
Nio stock is also reacting to a new deal with Geely Holdings on its battery swapping and charging business. This deal will see Yiyi Internet, which Geely owns, own about 30% stake in Nio’s battery swapping business. It values the business at $2.4 billion.
Nio share price forecast: technical analysis
Nio stock chart | Source: TradingView
The daily chart shows that Nio shares have been in a strong downward trend in the past few months, moving from a high of $7 in April to the current $3.58. It has consistently made a series of lower lows in this period.
It also plunged below the crucial support level of $4.37, its lowest level in February and the psychological level of $4. On the positive side, there are signs that the stock is bottoming out.
The two lines of the MACD indicator have formed a bullish crossover, while the Relative Strength Index (RSI) has jumped above the oversold level. Therefore, while the bearishness may continue, there is a likelihood that the stock will bounce back, potentially to the key resistance level of $4.37.
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