- NYSE:NIO dipped by 0.75% during Friday’s trading session.
- More positive announcements from NIO could see vehicle production double from its current output.
- NIO’s bullish breakout continues as the stock hits its 50-day moving average.
Update June 1: Nio Inc (NYSE: NIO) has had a rollercoaster in May, falling to new depths before recovering and painting a bullish picture. Shares of the Chinese automaker are on course to extend their gains in the new month – a move to recapture $40 looks to be in the making. Optimism about the global economy is outweighing the fears of the virus.
NYSE:NIO has remained a popular stock amongst investors even though shares have fallen over 40% since the height of the electric vehicle frothiness. On Friday, shares of Nio fell by 0.75% to close the week at $38.62. Despite the one day dip, Nio’s bullish thesis remains strong as the stock has been range bound and consolidating for the last three months, as investors rotated out of growth sectors over fears of rising inflation. With inflation concerns quelled for now, growth stocks have seen a recent rebound, and EV stocks are primed for another surge.
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On the enterprise front, NIO announced last week that it has re-signed a new three year agreement with the Jianghuai Automobile Group or JAC, to double its production of current NIO vehicles. This may come as a surprise to investors but NIO does not operate its own production warehouses, but rather uses JAC to manufacture the vehicles on their behalf. JAC has agreed to increase production capacity to 240,000 vehicles per year or 20,000 per month, even with the ongoing chip shortage that has plagued automakers around the world.
Is NIO a good stock to buy?
In terms of the technical analysis of Nio’s stock, the bullish breakout following its long consolidation period seems to be ready to go. Shares are now trading above the 50-day moving average, which is a sign that the stock is ready to break through a key resistance level. The current descending wedge formation is recognized by many as being a bullish formation that should see shares of Nio trend higher over the next few months.
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