Nio Stock Price Forecast: Is This a Bargain or a Value Trap?

Summary:
• Nio stock price has recoiled in the past few months as concerned about the Chinese economy continued. The shares have collapsed

Nio stock price has recoiled in the past few months as concerns about the Chinese economy continued. The shares have collapsed in the past four straight days and are now at their lowest level since May 12 of this year. It has crashed by more than 80% from its highest level in 2021, giving it a market cap of more than $22 billion.

Is Nio a good stock to buy?

Nio is a leading EV company that is often compared to Tesla, the largest automaker in the world. Last week, the company said that it sold a record 31,607 cars in the third quarter. That was a 29.3% increase from the same period in 2021. It was also about 26.1% above the second quarter. 

Nio has one of the biggest market shares in China’s EV market. It competes with companies like XPeng, Li Auto, and BYD, among others. In Q3. BYD sold 201,259 cars in September after selling 174k in August. Li Auto sold 26k cars in Q3 while XPeng sold more than 29.5k cars.

Nio share price has crashed in the past few months for several reasons. First, the Chinese economy is slowing dramatically and is expected to lag the performance of other Asian companies. The technology sector is unraveling, with companies like Alibaba, JD.com, and Tencent crashing from their all-time high. 

Similarly, the real estate sector is unraveling while the unemployment rate has risen. Therefore, there is a likelihood that the company will see slow growth in the coming months. 

Second, the company’s European business is expected to have slow growth due to the ongoing energy crisis. The firm started selling its cars in Norway in 2021. Therefore, with the region seeing major energy challenges, there is a possibility that the company will sell fewer cars in the near term.

Nio stock price forecast

The daily chart shows that the Nio share price has been in a strong downward trend in the past few days. As it dropped, it moved below the important support level to watch will be at $14.11, which was the lowest level on May 25th. It has crashed below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to the oversold level.

Therefore, the stock will likely continue falling as sellers target the next key level to watch will be at $11.72. A move above the key resistance level at $14 will invalidate the bearish view.