Nio Stock Forecast: NIO registers losses despite early gains from Chinese deregulation
- NIO stock gives back early gains reaped on deregulation of cross-border data.
- China's Cybersecurity Administration has reduced scrutiny of non-personal data.
- Hang Seng index closes 2.5% higher on the news.
- US Core PCE data for August shows inflation slowing, boosts US stocks.
Nio (NIO) stock rose 1.2% early Friday, to $9.02 but then promptly gave back gains to trade lower at the time of writing. The early boost came as Chinese stocks made broad-based gains after a domestic regulatory body reduced regulations for cross-border digital data flows. Hong Kong’s Hang Seng index closed 2.5% higher on the news.
Fellow Chinese corporations Alibaba (BABA), XPeng (XPEV) and Li Auto (LI) saw their American Depository Receipts (ADRs) rise in tandem on the news. The NASDAQ rose 1.3% on Friday after a bad start to the week on positive inflation data.
US stocks are marginally higher on Friday after lower than expected Personal Consumption Expenditures (PCE) data from August. This is the Federal Reserve's (Fed) favorite inflation marker. The reading showed Core PCE coming in at 0.1% on a monthly basis, half the rate expected by analysts. This is the first time in two years that Core PCE has dropped below 4% on an annual basis. It registered 4.3% in July.
Nio stock news: Cyberspace administration proposes to reduce data burden
China’s Cyberspace Administration released a proposal on Friday that would mean marketing, international trade and global manufacturing data that does not include personal data would not require a security review. This would make it much easier for multinational Chinese corporations like Nio, who routinely gather user data to study their products and markets.
Chinese traders view the move as one that will boost the competitiveness of Chinese firms and reduce their barriers for entry into foreign markets.
The rally is much appreciated by shareholders as NIO stock has been trying to recover from the 22%+ sell-off two weeks ago that enfolded after the electric vehicle manufacturer sold $1 billion in senior convertible notes. Conversion of the notes would mean dilution of 5% to 6% for existing shareholders, but Nio said it would be able to reduce its nearly $4 billion in outstanding debt.
Shareholders have another reason for excitement as well. On Monday, NIO shares will likely react to September delivery data. Nio has beaten expectations for deliveries in each of the last two monthly announcements, and the September delivery hurdle is lower compared to previous months. Nio only needs to deliver between 15,200 and 17,200 vehicles to meet management’s forecast for 55,000 to 57,000 units in the third quarter. Nio delivered 19,329 vehicles in August.
Nio shares were already tracking higher on Thursday after rumors made it to Reuters that management was in talks with Mercedes-Benz to trade the German automaker technology in exchange for investment. Both companies vehemently denied there were any ongoing talks.
NIO FAQs
What is Nio?
Nio is a designer and manufacturer of electric vehicles based in Shanghai, China. Formerly known as NextEV, the company changed its name to Nio in 2017. Nio trades under the NIO symbol on the New York Stock Exchange (NYSE) and under the 9866 tag on the Hong Kong Stock Exchange. The company was incorporated in 2014 but went public on the NYSE in September 2020 with a $1.8 billion initial public offering. William (Bin) Li is the CEO of Nio, which he co-founded with President Lihong Qin, another Chinese business executive.
How is Nio different from other EV manufacturers?
The main difference with other major EV brands like Tesla is that Nio offers battery swapping technology in addition to normal charging options. These swap stations allow drivers to switch out their batteries for fully-charged, identical batteries in less than five minutes, which allows owners to drive long distances without needing to stop for an hour to recharge like most other EVs. At the end of 2022, Nio had 1,305 battery swap locations and built its first swap station in Norway in May 2022. The goal for the customer is to reduce range anxiety.
What vehicles does Nio offer?
Nio began its reign with the EP9 sport car back in 2016, and the vehicle is still being produced on a small scale. Since then, Nio has branched off into more mainstream fare. The ES8 was introduced in 2018. It is a full-size SUV with a range of 311 miles. The ES6 SUV dropped the following year and has a range of 379 miles. The smaller EC6 SUV arrived in 2020, and the ET5 and ET7 sedans were released in 2021 – the latter two with versions capable of achieving 621 miles of range. The ES7 and EC7 arrived in 2022 and 2023, respectively.
Are Nio vehicles sold outside China?
Yes. While the vast majority of Chinese automakers focus wholly on the Chinese market, Nio began its foray into Europe in late 2021. After beginning in Norway, Nio began entering the German, Danish, Dutch and Swedish markets in 2022 with plans to expand throughout the rest of the decade. Although they are not yet sold in the US, Nio vehicles are being tested in California under that state’s autonomous driving program.
Nio stock forecast
Nio stock is already trading above its 9-day Simple Moving Average (SMA) in Friday’s premarket. The next barrier is $9.50, which has roughly worked as both support and resistance in several instances over the past year. After that, the 21-day SMA at $9.72 comes into play. A break of the latter moving average will instill more confidence in bulls.
The rally makes sense as well since NIO stock was plumbing the depths of the neutral territory on the Relative Strength Index (RSI) over the past two weeks. A break above the 21-day SMA will offer exposure to the $10.15 to $11.30 resistance band.
NIO daily chart
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
