- NIO shares have fallen nearly 40% from January highs.
- NIO is a heavily favoured retail interest stock.
- NIO shares had a stellar rise in 2020.
Update: Shares in NIO rode the volatile session on Friday as markets whipsawed following the US jobs report. NIO bounced from lows of $31.91 to close Fiday at $38.11 a loss of 2.98% on the day.
NIO is again under the spotlight as shares suffer another day of losses. NIO shares fell 5% on Thursday to close at $39.28.
NIO is a Chinese electric vehicle (EV) manufacturer designing, manufacturing and selling smart EV's. NIO is also involved in the autonomous driving sector.
NIO Stock Forecast
NIO announced results on Monday after the market closed for Q4 2020. EPS was -$0.16 versus an estimate of -$0.07 according to Refinitiv. Revenue came in slightly ahead of expectations at $1.03 billion versus $1.01 billion. This is a rise of 133% from a year earlier.
Overall NIO had a very good 2020 with revenue more than doubling, deliveries in Q4 were 17,353 versus 8,224 in Q4 2019. Total 2020 vehicle deliveries were 43,728 as against 20,565 in 2019.
For Q1 2021, the Company expects: "Deliveries of the vehicles to be between 20,000 and 20,500 vehicles, representing an increase of approximately 421% to 434% from the same quarter of 2020, and an increase of approximately 15% to 18% from the fourth quarter of 2020.
Total revenues to be between RMB7,382.3 million (US$1,131.4 million) and RMB7,557.2 million (US$1,158.2 million), representing an increase of approximately 438.1% to 450.8% from the same quarter of 2020, and an increase of approximately 11.2% to 13.8% from the fourth quarter of 2020".
On the earnings conference call, NIO said it will enter the European market and has researched entering the US market according to Reuters.
The delivery targets for Q1 2021 disappointed investors who had been hoping for a continued strong pace of growth. Q3 to Q4 2020 delivery growth was over 40%. But battery issues and the well-flagged semiconductor problems were mentioned by CEO William Li on the analyst call.
"For the first half of this year, we would like to be more conservative," "For the second half of this year, we are quite confident about the demand, but we do not have the full visibility yet," he said.
Post these results JP Morgan reduced its price target for NIO from $75 to $70.
NIO Technical analysis
The chart on NIO shows the appreciation in 2020 as the electric vehicle sector appreciated sharply. So are we reaching levels where NIO starts to look attractive again? Well given the speculative froth surrounding markets at present and the EV sector in 2020 a significant pullback was required. In order to contemplate turning bullish NIO needs to form a consolidation pattern around current levels before retaking its 8-day moving average and the downward sloping trendline resistance. A break back above c.$45 is needed to begin to see a change in current bearish sentiment, with $52 resistance beyond that. Otherwise support at $29.32 becomes the next target.
Fundamental changes to the EV sector need to be watched as all auto manufactures move to electric. Volvo announced it will be fully electric by 2030, Ford says it will be fully electric in Europe by 2030. The EV sector is about to become more crowded from legacy automakers.
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