Nio stock price has bounced back this month as investors buy the dip. It has risen for eight consecutive days and is hovering at its highest level since April 1. It is up by over 30% from its lowest level this year, bringing its market cap to over $8.2 billion. Let’s explore whether the Tesla rival is a good buy today.
Nio’s business is growing
While the Nio stock price has crashed and erased billions of dollars in value over the years, its business is performing well, with sales increasing.
Its business is being driven by its top brands like the ES8, ES7, ES6, EC7, ET5, and the recently launched ONVO, its mass market brand.
Its annual results show that its annual revenue stood at $2.49 billion in 2019, a figure that then jumped to $9 billion in 2024. This represents an impressive 275% annual growth in an industry that has become highly competitive.
The most recent data showed that its vehicle deliveries and revenues continued rising. It delivered 72,689 vehicles in the fourth quarter, up from the 50,045 that it delivered in the same quarter last year.
This growth was driven by the inclusion of its Onvo vehicle sales, which have continued rising recently. Nio’s vehicle sales jumped by 13.2% to RMB 17.4 billion in the fourth quarter of last year.
Most importantly, the vehicle margin rose to 13.1% from the previous 11.9%. For the year, its revenue rose by 18.2% to RMB 58.23 billion, while its annual gross margin rose to 9.9%.
Challenges and opportunities
Nio hopes to continue growing its business by launching new models and entering new markets. Nio, its flagship vehicle brand, is doing well, while demand for its ONVO vehicles is growing. The only challenge is that it has faced some major production challenges. It hopes that Firefly, its third brand, will be a key player in its international business.
The other challenge is that the company has largely failed to enter the United States, the most lucrative market for vehicles globally. Joe Biden placed a 100% tariff on all Chinese EV vehicles to protect local companies.
The company is also facing challenges accessing other countries, especially in Europe, which has also placed tariffs on Chinese EVs. Europe argues that Beijing has delivered substantial subsidies to companies, undercutting its firms.
Furthermore, Nio is facing significant competition from companies such as BYD and XPeng. The main benefit for NIO is that the company owns a battery swapping infrastructure that helps to deal with range anxiety.
BYD has announced that it has created a battery that charges for about 5 minutes. And in a statement this week, CATL said that its battery charged faster than that. Such faster charging speeds could make the battery swapping technology almost worthless. Fortunately, NIO buys its batteries from CATL.
Nio is also incurring substantial losses. Its annual loss jumped to RMB 22.4 billion, up from RMB 20.7 billion a year earlier. As a result, it has continued to dilute its shareholders. It raised over H$ 4 billion by selling shares earlier this month.
Read more: Nio stock price forecast: epic comeback likely after earnings
Nio stock price analysis
Nio stock chart | Source: TradingView
The daily chart shows that the Nio share price has rebounded over the past few days, moving from a low of $3.05 this month to $3.93, its highest swing since April 1.
It has moved above the key resistance level at $3.60, its lowest level in April and August last year.
The stock is poised to move above the 50-day moving average, while oscillators such as the Relative Strength Index (RSI) and MACD have indicated an upward trend. Therefore, the stock will likely continue soaring as bulls target the key resistance at $5.57, up by 41% from the current level. A drop below the support at $3 will invalidate the bullish view.
The post Nio stock analysis: is this Tesla rival a buy today? appeared first on Invezz