- Summary:
- Nio stock price has been sending mixed signals in recent days, but there's a stronger case for buying. Also, could Tesla spoil the party?
Nio stock price went down on Tuesday, continuing with its recent whipsaw trend as investors weigh their risk-reward balance. Nio (NYSE: NIO) traded at $5.76 and was down by 0.95 percent at the time of writing, a contrast from Monday’s double-digit gains. A rejection at the $6.00 level signifies the cautious approach with which investors are treating the stock after years of loss-making.
However, the stock price decline could be a small window to “buy the dip” before the company announces its sales figures inclusive of first full-month sales of the Onvo L60 cross-over SUV model. The company previously stated that it could break even if it sold an average of 30,000 vehicles per month, and the new vehicle model could help it achieve that.
The Onvo L60 has a sub-$30k starting price, and is billed as a formidable competitor to Tesla’s Model Y. After five successive months with sales above 20,000 units, the new model could be the catalyst the company needed to start registering profits. Besides the Onvo L60, the company also reported significant growth in its battery swap business.
The segment gives Nio leverage that other EV companies, including Tesla, do not have. As consumers enjoy the time-saving benefits of battery swapping as opposed to battery charging, it could grow into a major revenue stream and help propel Nio sales.
The risk around Nio stock
In the near-term, the downside for Nio stock price is the upbeat sentiment surrounding EV rival, Tesla. Following Tesla’s strong Q3 earnings figures and upbeat growth guidance, many investors could choose to go with the American EV company. It makes perfect sense, as one company is yet to report its first quarterly profit while the other has proven the profitability of its business model.
As such, investors who are keen on diversifying their portfolio will likely choose Tesla over Nio when it comes to EV stocks. Nonetheless, I believe that Nio is entering an inflection point that will likely see it start reporting profits, thanks to the recently-unveiled cheaper models (Onvo L60 and Firefly) and market expansion beyond China. Therefore, the current Nio stock price decline could be the perfect opportunity to buy low.
Nio stock price prediction
The momentum on Nio stock price calls for a continuation of the downside below the 5.80 pivot mark. That will likely see the establishment of the first support at 5.71. However, if the sellers strengthen their hold of the market, the initial support could be broken and a second support established at 5.60.
On the other hand, the buyers will be in control if the price goes above 5.80. The resulting momentum could encounter the first resistance at 5.90, but a stronger bullishness could breach that mark. At that point, the downside narrative will be invalid, and the price could potentially to test the second barrier at 6.00.
