Nio stock has pulled back sharply in the past two months, moving from a high of $6.98 in May to a low of $4.66. It has stabilized recently, rising to $5.13 in the premarket session today. This rebound may continue as Chinese EV exports and its growth momentum continue.

Nio’s business is doing well as demand rises

Nio Inc. is a top Chinese EV company that owns three brands: Nio, ONVO, and Firefly. It has become a major Tesla rival with a market capitalization of over $12.3 billion. 

The company’s business has continued to grow this year despite the challenges in the country. Its deliveries and revenues have outperformed other rivals, including companies like XPeng, Li Auto, and BYD.

The most recent results showed that its deliveries jumped by 49.4% in the second quarter to 107,658. Its June deliveries rose by 62.9% to 40,597, slightly lower than expected, as customers waited for the ES9 and the five-seat ES8.

In contrast, BYD’s deliveries dropped by 3% YoY, while Li Auto’s deliveries fell by 13.7%. Polestar’s deliveries rose by 38% during the quarter. 

Nio’s business has done well because of the quality of its vehicles and the hype surrounding the recent launches. Its premium Nio brand sold 21,908 vehicles, while ONVO and Firefly delivered 11,743 and 6,946 vehicles. 

Nio’s sales will likely continue growing, helped by the recently launched ES9, which starts at the equivalent of $73,000 and has a range of over 600 kilometers. The vehicle, if bought with a battery-as-a-service subscription, has a starting price of $57,000. Its deliveries rose to 8,595 in June, its first full month of deliveries.

Revenue growth is continuing

The recent vehicle deliveries mean that its revenue continues to grow last quarter. Yahoo Finance data shows that the average estimate is that its revenue jumped by 76% to CNY 33.50 billion. 

Analysts anticipate that its current quarter’s revenue will be CNY 36.33 billion, up by 67% YoY. The annual revenue is expected to jump by 56% this year to CNY 136.3 billion, followed by CNY 156.75 billion. In contrast, analysts expect that Xpeng’s annual revenue is expected to grow by 20% to CNY 92.34 billion. 

Some analysts believe that the stock has more upside to go, with Tina Hou, a Goldman Sachs analyst placing a target of $7. If this happens, it would jump by 42% from the current level. The average estimate among analysts is $6.70. 

A potential catalyst for Nio is that its business will benefit from the rising Chinese EV exports. Data released today showed that China’s EV exports crossed the 1 million milestone in June. Shipments jumped by 71.2% from a year earlier, with the number expected to hit 10 million from last year’s 7.1 million.

Nio stock technical analysis

Nio stock chart | Source: TradingView

The daily chart shows that Nio shares bottomed at $4.66 in June and has crawled back to $5.11. It has formed a descending channel in the past few months and has moved above its upper side. Also, the two lines of the Percentage Price Oscillator (PPO) have formed a bullish crossover.

The Relative Strength Index (RSI) has pointed upwards and moved above the RSI-based MA. Therefore, there is a likelihood that the stock will continue rising, potentially to $6. This rally will likely depend on its upcoming earnings report.

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