Nio stock price has plunged in the past four consecutive weeks as investors reacted to its recent financial results. Its US shares dropped to a low of $5.50, its lowest level since August 18 this year. It has dropped by over 30% from the highest point this year.
Nio stock price dropped after earnings
Nio, one of the biggest electric vehicle companies in China, has come under pressure in the past few weeks. This retreat accelerated recently after publishing its financial results, which showed that its business continued growing.
Nio’s results showed that its vehicle deliveries rose to 87,071 in the last quarter from 61,855 in the same period last year. This growth was driven by its eponymous brand and its newer brands like ONVO and Firefly. In a statement, the CEO said:
“We are working closely with supply chain partners to ramp up production and expect total deliveries in the fourth quarter to reach between 120,000 and 125,000 units, reflecting a year-on-year increase of 65.1% to 72.0% and setting a new quarterly record.”
Consequently, Nio’s revenue continued its growth trajectory, growing by 16.7% to $3 billion from the same period last year. This growth confirm that there is strong demand for the company’s products despite the rising competition from firms like BYD and Xpeng.
Nio is moving towards profitability
The results also had other notable aspects, including an increase in the closely-watched gross profit margin. This margin increased from 10.7% to 13.7%, higher than BYD’s 6%. Nio is slowly catching up with other companies Xpeng and Tesla that have a gross margin of 20% and 17%, respectively
More numbers revealed that Nio has reduced its losses, which still remain at an elevated level. Its adjusted loss from operations improved by nearly 40% to $390 million, while its net loss improved to $488 million.
The management believes that the company will turn a profit soon now that it has completed its main product launches. It expects that a net profit will come possibly in 2026.
Analysts, however, are more pessimistic, with the average estimate showing that its earnings-per-share will come in at minus CNY 6.99 this year, much better than the CNY 9.92 it made in the same period last year. The loss will then narrow to CNY 3.73 next year.
One major reason why the Nio stock price has crashed recently is that the company continues to be highly dilutive. It recently completed a $1.16 billion equity offering by selling over 209 million shares.
The most recent dilution happened in October when the company issued 55 million shares to Deutsche Bank. This dilution aims to facilitate future exercise of options and other share incentive awards
Nio share price technical analysis
The daily timeframe chart shows that the Nio share price has crashed in the past few months. It has dropped from the year-to-date high of $8.05 in October to the current $5.5, its lowest point since August 21.
Nio has moved to the 50% Fibonacci Retracement level. It also dropped below the 50-day and 100-day Exponential Moving Averages.
It also moved below the important support level at $6.28, its lowest level on October 16. The Relative Strength Index (RSI) has also continued falling, while the stock has formed a head-and-shoulders pattern.
Therefore, the stock will likely continue falling as sellers target the 61.8% retracement level at $4.95.
READ MORE: NIO stock’s recent pullback is a gift for long-term investors: here’s why
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