Nio stock price forecast after the stellar Q2 earnings

The Nio (NYSE: NIO) stock price bounced back in extended hours after the Chinese electric vehicle company announced stellar results. The stock rose by more than 1% to $44.45, bringing its total market capitalization to more than $72 billion.

Nio earnings

Nio is one of the biggest Chinese manufacturers of electric vehicles. It is also the biggest competitor to Tesla in the country. 

In a report published on Wednesday, the company said that it delivered 21,896 vehicles in the second quarter. This was a strong performance after the company delivered 20,060 cars in the previous quarter. The trend has been rising, considering that the firm delivered just 10,330 vehicles in the same quarter in 2020. 

Most importantly, Nio boosted its forward guidance on deliveries even as the company continued facing significant part shortages. It expects to deliver between 23,000 and 25,000 vehicles in the third quarter.

Other highlights for the company’s report was that its revenue rose to more than $1.491 billion, which was higher than the consensus estimate of $1.42 billion. Its gross profit increased to more than $243 million while its gross margin rose to 18.6%. 

Still, like other fast-growing Chinese EV companies like XPeng and Li Auto, the company is still making significant losses. The firm said that its losses increased to $90million. This is understandable since the company is using most of its income to fund operations and growth. In a statement, Wei Feng, the company’s CFO said:

“Driven by another record-high quarterly delivery in the second quarter of 2021, we have achieved solid financial performance with vehicle margin and gross margin reaching 20.3% and 18.6% respectively.”

Is the Nio stock a buy or sell?

The Nio stock price has struggled this year after it had a stellar 2020. It has already declined by more than 33% from its all-time high. This decline has happened even as the company has ramped-up its production amid a growing supply shortage. 

The firm has also moved to expand overseas. In June, the company acquired a new license in Europe as it seeks to capture market share from existing brands like Tesla and BMW.

Analysts have generally been bullish on Nio. For one, those at HSBC expect that the Nio stock price will keep rising to $69 while those at Citigroup, Mizuho, and Deutsche Bank expect that it will rise to above $57.

Nio stock price analysis

The daily chart shows that the Nio share price has declined substantially from its highest point this year. It has also declined by about 20% from its highest point in July. Along the way, the stock has moved to the 25-day and 50-day exponential moving averages (EMA). 

It also appears like it has formed a head and shoulders pattern. Therefore, there is a possibility that the stock will resume the downward trend as bears target to move below $40.