Nio stock price has crashed in the past few years and is hovering at its lowest point since 2020. It has plunged by 95% from its highest point in January 2021, bringing its market capitalization to over $83 billion to $6.90 billion today.
Why Nio share price has plunged
Nio share price has been in a free fall in the past few years as it has erased billions of dollars in value. This decline happened even as the electric vehicle industry in China boomed.
Nio stock has dropped because of the rising competition as the market became saturated. BYD, a company backed by Warren Buffett, has become the biggest EV firm in China, selling millions of cars a year.
Nio Inc. is also competing with other companies like Li Auto, Xiaomi, Great Wall, Tesla, and XPeng. This competition has eroded its market share and margins as companies slash prices.
Nio stock price has plunged because of its elevated losses and continued dilution. Data compiled by SeekingAlpha shows that its annual loss stood at $859 million in 2020 and has continued to grow each year after that.
Its loss rose to $1.6 billion in 2021, $2.11 billion in 2022, $2.97 billion in 2023, and $3.14 billion last year. This loss-making trajectory happened as it boosted its investment in the Chinese market.
Nio also has a long record of manufacturing challenges and missing its production targets. This, in turn, has pushed investors to faster-growing Chinese companies like XPeng and Li Auto.
Read more: Nio stock price has crashed: is it a good buy today?
June and second-quarter deliveries
The most recent Nio stock price catalyst was its June and second-quarter deliveries. Its numbers showed that it delivered 24,925 vehicles in June, a 17% annual increase.
These deliveries brought the second-quarter figures to 72,056, up by 25.6% from the same period last year. This growth is important considering that some popular EV companies are slowing. For example, Tesla continues to lose market share in key markets like China and Europe.
Most of Nio’s deliveries were from its flagship brand, followed by its recently launched ONVO and Firefly brands. ONVO vehicle deliveries stood at 6,400, while Firefly’s rose to 3,932. These numbers are lower than what the company guided.
The next catalyst for the Nio stock price will be its upcoming earnings, which are scheduled on August 25 this year. Analysts anticipate the results to show that Nio’s revenues will grow by 15% to RMB 20 billion, while its earnings per share deteriorate to RMB 2.2.
The annual revenue is expected to reach CNY 89.73 billion, representing a 35% annual growth. Its annual EPS will be CNY 8.14, followed by CNY 6.74.
Nio stock price technical analysis
The weekly chart shows that the Nio share price has been in a strong downtrend in the past few years. It has crashed from a high of $66.28 in 2021 to the current $3.50.
Nio has formed a descending channel, whose upper side connects the higher highs since January 2021. The lower side of this pattern links the lowest swings since March 14.
Nio has moved below the 50-week Exponential Moving Average (EMA), a sign that bears are in control. The Relative Strength Index (RSI) has formed a symmetrical triangle pattern whose two lines are about to converge.
Therefore, the Nio stock price will likely remain in a downtrend in the near term. If this happens, it will likely drop to the next support at $2.50, the lower side of the descending channel. A move above the upper side of the descending channel will invalidate the bearish view.
The post Nio stock price trapped in a giant descending channel: What’s next? appeared first on Invezz
