- NYSE: NIO is set to end the week and the month on a positive note.
- Nio Inc's shares are seen as expensive while it remains unprofitable.
- Lessons from Elon Musk's Tesla are promising for the firm.
Is a market capitalization of around $14 billion rich for an electric vehicle company? Some analysts suggest that NYSE: NIO current valuation – with shares trading above $12 – is expensive. The primary reasoning for the downbeat assessment on Nio Inc - ADR stems from a basic business lacking – profitability.
However, it is essential to note that Nio, based in Shanghai, China, was founded only in late 2014 and may need more time to turn a profit. The largest EV firm, Tesla, struggled not only with income but also with cash flow.
On the other hand, Nio has the backing of Beijing. Authorities may encourage locals to purchase the company's cars and thus create a national champion. Elon Musk's Tesla may be the market leader – but while it sells in China, the local rival may gain market share.
Tense Sino-American relations may weigh on Nio's sales outside its home country, but the vast Chinese market allows ample room for growth.
NIO Stock Forecast
NYSE: NIO is set to open at $12.36, up over 1% according to pre-market trading. Nio shares would only claw back some of Thursday's losses. However, end-of-month flows could trigger higher volatility, potentially lifting the stock.
The next levels to watch are the weekly closing high of $12.70, followed by the mid-July peak of $14.09, and then by the high close of $14.90 achieved earlier in the month. The stretch target for bulls is $16.44, the 52-week high.
Support is found at Monday's low close of $11.69, followed by $11.09, a level recorded in the previous week. The psychologically significant $10 level is next.
Nio Inc - ADR has made a long journey from the 52-week low of $1.19 and is valued at over 11 times that price.
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