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Nio stock price prediction: a bargain or a value trap?

By: Invezz
nio stock price forecast following q4 loss

Nio (NYSE: NIO) stock price freefall accelerated on Monday after the company published its March delivery numbers and launched a new subsidy program. It slipped to $4.50, continuing a remarkable collapse that has been going on since the stock peaked at $67.1 in 2021. 

Nio deliveries and subsidy program

Nio, the giant Chinese EV company is facing numerous headwinds in China and other international markets. 

In China, the company is contending with increasing competition from the likes of BYD, Xpeng, and Li Auto. It is also competing with Xiaomi, the cash-rich company that is often seen as China’s Apple. Recent reports show that Xiami’s new car has a seven-month waitlist, pointing to high demand.

Nio’s international business is not doing well. A recent report noted that the company had shuttered most of its operations in Denmark as it fired 25 of its 30 employees. It is said that the company sold just 56 cars in 18 months.

Nio’s performance in other European markets is also not good. Most analysts believe that the company is suffering from numerous factors like low brand awareness, lack of the battery swapping stations, and the lack of a price advantage compared with other companies.

There are also signs that the company’s demand in China is not doing well as the company launched a RMB 1 billion ($140 million) subsidy program targeting petrol car owners. Petrol car owners who buy a new Nio 2024 model through trade-in will get RMB 10,000 in subsidies. 

In a statement on Monday, Nio said that it delivered 30,053 vehicles in the first quarter. In a statement last week, the company slashed its Q1 delivery estimates to between 30k and 33k. Nio has now delivered over 479 vehicles since its inception.

Q1 deliveries in China tend to be weaker than in the other quarters because of the Lunar New Year, where most workers in key cities travel upcountry. Analysts expect that Nio will deliver over 120k vehicles this year.

Therefore, there are signs that Nio will continue seeing more headwinds as competition rises leading to weak margins.

Nio is, without a doubt, one of the cheapest companies in the EV industry. It has a price-to-sales ratio of 0.978, lower than last year’s high of 3.50. XPeng, a key competitor, has a multiple of 1.4x. Rivian and Lucid have P/S multiples of 2.34 and 9.9, respectively.

Nio stock price forecast

NIO chart by TradingView

The daily chart shows that the Nio share price has been in a strong downward trend for a long time. It recently crashed below the crucial support level at $4.80, its lowest swing on March 5th of this year.

The stock has remained below the 50-day moving average, signalling that bears are in control. Also, the Average True Range (ATR) has tumbled, signalling that there is little volatility. The Relative Vigor Index (RVI) has also retreated.

Therefore, the outlook of the stock is bearish, with the next point to watch being the psychological point at $4.0.

The post Nio stock price prediction: a bargain or a value trap? appeared first on Invezz

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