NIO Inc

NIO Inc (NYSE: NIO) is a China-based holding company principally engaged in the research, development, and manufacturing of premium smart electric vehicles. The Company is mainly engaged in the design, development, manufacture, and sales of high-end smart electric vehicles. The Company's products mainly include ES8, ES6, EC6 and ET7. The Company develops battery swapping technologies and autonomous driving technologies.

Recent Business Updates:

• Operational Highlights:
  • In Q2 2023, the company delivered 23,520 vehicles, including 10,492 premium smart electric SUVs and 13,028 premium smart electric sedans. This marked a 6.1% decline compared to Q2 2022 and a 24.2% decrease from Q1 2023.
  • In September 2023, NIO achieved a year-over-year increase of 43.8% by delivering 15,641 vehicles. This delivery comprised 11,504 premium smart electric SUVs and 4,137 premium smart electric sedans. During the third quarter of 2023, NIO delivered a total of 55,432 vehicles, demonstrating a substantial year-over-year growth of 75.4%. As of September 30, 2023, the cumulative deliveries of NIO vehicles reached 399,549.
  • Additionally, on September 15, 2023, NIO introduced and initiated deliveries of the All-New EC6, a smart electric coupe SUV. Leveraging NIO Technology 2.0, the All-New EC6 underwent comprehensive enhancements, including innovative design elements, outstanding performance, and advanced intelligent features. These improvements aim to provide families and individuals seeking inspiration with an exceptional experience that exceeds expectations.
  • NIO Inc. has completed its offering of USD500 million in convertible senior notes due 2029 and USD500 million in convertible senior notes due 2030. The company also granted initial purchasers an option to buy up to an additional USD75 million of each set of notes and used some of the net proceeds to repurchase its outstanding convertible senior notes, with the remainder allocated to strengthening its balance sheet and general corporate purposes.

• Financial Highlights:
  • Vehicle sales in Q2 2023 amounted to RMB 7,185.2 million (USD 990.9 million), representing a 24.9% reduction compared to Q2 2022 and a 22.1% decrease from Q1 2023.
  • The vehicle margin for Q2 2023 was 6.2%, contrasting with 16.7% in Q2 2022 and 5.1% in Q1 2023.
  • Total revenues for Q2 2023 were RMB 8,771.7 million (USD 1,209.7 million), showing a decline of 14.8% from Q2 2022 and a decrease of 17.8% from Q1 2023.
  • Gross profit for Q2 2023 amounted to RMB 87.0 million (USD 12.0 million), indicating a substantial decrease of 93.5% from Q2 2022 and a reduction of 46.4% from Q1 2023.
  • The gross margin for Q2 2023 was 1.0%, in contrast to 13.0% in Q2 2022 and 1.5% in Q1 2023.
  • Operating losses in Q2 2023 amounted to RMB 6,074.1 million (USD 837.7 million), marking an increase of 113.5% from Q2 2022 and a rise of 18.8% from Q1 2023. Adjusted for share-based compensation expenses, the adjusted loss from operations (non-GAAP) in Q2 2023 was RMB 5,464.1 million (USD 753.5 million), indicating an increase of 132.0% from Q2 2022 and a rise of 20.8% from Q1 2023.
  • The net loss for Q2 2023 was RMB 6,055.8 million (USD 835.1 million), reflecting an increase of 119.6% from Q2 2022 and a rise of 27.8% from Q1 2023. Excluding share-based compensation expenses, the adjusted net loss (non-GAAP) for Q2 2023 was RMB 5,445.7 million (USD 751.0 million), marking an increase of 140.2% from Q2 2022 and an increase of 31.2% from Q1 2023.
  • As of June 30, 2023, the combined value of cash and cash equivalents, restricted cash, short-term investments, and long-term time deposits amounted to RMB 31.5 billion (USD 4.3 billion).
    

Technical Observation (on the daily chart)

The stock has corrected by around 48.47% from its recent high of USD 16.18 formed on August 04, 2023, and near its decent support levels of USD 8.00 to USD 8.50.  The RSI (14 period) momentum indicator is at a value of 38.79, with expectations of some consolidation or a short-term upside momentum. Moreover, the price is currently positioned below both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term resistance levels.

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As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to NIO Inc (NYSE: NIO) at the current market price of USD 8.34 as of October 17, 2023, at 06:45 am PDT.

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing. 

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

How to Read the Charts?

The Green colour line reflects the 21-period simple moving average (SMA) while the red line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.

The Black colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.

The Blue colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps with easier and faster execution of the order.

The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock. 

Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock. 

Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices. 

The reference date for all price data, currency, technical indicators, support, and resistance levels is October 17, 2023. The reference data in this report has been partly sourced from REFINITIV. 

Abbreviations

CMP: Current Market Price

SMA: Simple Moving Average

RSI: Relative Strength Index

USD: United States dollar 

Note: Trading decisions require a thorough analysis by the individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.