Nio stock price forecast: “It needs to recalibrate its strategy”

Nio (NYSE: NIO) stock price has remained under pressure as the Chinese “Tesla killer” face numerous headwinds in its operations. The shares have dropped in the past three days and is hovering near its lowest level this year. Nio stock has dropped by more than 87% from its all-time high.

Tesla-killer stumbles

Nio is one of the several EV Chinese companies that became popular for challenging Tesla, the biggest automaker in the world. The company was loved because of its high quality companies that sold for a fraction of what Tesla did.

Recently, however, Nio has faced substantial headwinds as the Chinese market gets more competitive. The company has seen the number of vehicle deliveries slip in the past few months. It delivered 6,155 vegcles in May, bringing the year-to-date deliveries to over 43.8k. It has delivered over 333k vehicles cumulatively.

Recent data shows that the company’s deliveries are falling. As a result, the company decided to slash prices earlier this month. It cut prices by about $4,200, which will affect its already thinning margins. These cuts were a reflection that the company’s growth is slowing at a rapid pace. Nio is now betting on its recently launched ES6, a new SUV it hopes will attract more buyers this year. 

The other important news was that the company raised cash from a company owned by Abu Dhabi’s government. It raised $738 million, giving the company a 7% stake. The fundraising was important because the company’s cash has been dwindling. It had $2.88 billion in December and $2.1 billion in June this year. 

Still, the company faces more headwinds than tailwinds. For example, the Chinese economy is slowing and there are concerns about whether ES6 will boost sales. It is also unclear whether the battery swapping shift will boost its returns. In a note, an analyst at Sina Auto Insights said:

“Price cuts should temporarily boost sales, but NIO may have to recalibrate its product and pricing strategy.”

Nio stock price forecast

NIO chart by TradingView

The daily chart shows that the Nio share price has moved sideways in the past few months. It has remained below $10 for months and the stock is loitering at the 50-day and 25-day moving averages. At the same time, the Average True Range (ATR) has continued falling.

Therefore, there is a likelihood that the stock will remain in this range in the coming days and then drop to the support at $7.23, which is about 15% below the current level. A move above the resistance point at $10 will invalidate the bearish view.