Nio Stock Price On the Cusp Of A Major Upturn, But Here’s the Problem

Summary:
• Nio stock price initially had a scintillating performance in September. So what went wrong in October, and are we seeing the whole picture?

Nio stock price extended its loss-making streak into the new week, declining by 1.4 percent to trade at $5.15 at the time of writing. That brought its losses to slightly more than 8 percent in the last five trading sessions, signaling a bearish control that could persist in the near-term in the absence of a major positive shift in the company’s fundamentals.

The Chinese EV manufacturer put up a strong show in September, during which it rose by 65 percent. However, it has registered losses in each of the first three weeks of October. The decline has mostly been attributed to a market-wide phenomenon in its main market of China, as opposed to a company-specific underperformance.

Why its too early to write off Nio

China initially excited the market when it announced a stimulus plan in late September. However, the momentum dissipated in October, as the country’s economic decision makers failed to pronounce aggressive expenditures on the EV industry. That has affected the outlook for Nio (NYSE: NIO), as it is among the major beneficiaries of major government subsidies.

However, Nio’s outlook shouldn’t be weighed against the Chinese government’s stimulus gesture. The company has registered strong sales growth in 2024, despite the downturn in China’s economy. In addition, its most recent earnings beat consensus forecasts, creating a strong bottomline to sustain the upside.

Also, the company received a substantial capital infusion from its lead Chinese investors, cushioning it from market shocks in the near term. Furthermore, the company will announce its first full monthly sales figures inclusive of its new model Onvo L60 SUV sales within the next two weeks. A spike in its sales could provide fresh volatility for Nio stock price and help reverse its recent decline.

Nio stock price prediction

Nio stock price pivots around 5.23, and the downside will prevail if resistance persists at that point. That will likely see the establishment of initial support at 5.13. However, that level could be broken by an extended bearish control, which could send the price lower to the second support at 5.07.

Alternatively, a move above 5.23 will favour the bulls to take control. In that case, the first resistance could come at 5.29. However, extended bullishess could breach that level and invalidate the downside narrative. Also, the momentum could send the stock higher to test 5.36.