Nio Stock is at a 52-Week Low, Can it Bounce Back?
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Nio Stock is at a 52-Week Low, Can it Bounce Back?

Amid a broader market decline, Nio's shares closed at $5.79 on Tuesday, a fresh 52-week low.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

This year has been challenging for the broader electric vehicle (EV) market, with the Chinese automaker Nio (NYSE: NIO) grappling with especially intense pressure. The company’s stock fell more than 5% on Tuesday, hitting a 52-week low.

Nio Shares Hovering Above 3.5-Year Support

Nio stock fell 5.7% on Tuesday to $5.79, a fresh 52-week low.

The downswing represents the latest blow for the EV maker, which has been on an overall downtrend since the start of 2024. Year-to-date, the stock plummeted more than 31%, making it one of the worst-performing EV stocks.

Overall, the broader market has been trading in the red this year, with the industry leader Tesla (NASDAQ: TSLA), BYD, and Li Auto (NASDAQ: LI) all seeing double-digit losses since January 1.

At the current share price, Nio is trading well below its 100-day and 200-day moving averages (MA), which are located at $7.98 and $8.95, respectively.

On the downside, the stock is hovering above $5.5, a level not touched since June 2020. On the upside, Nio faces a resistance zone between $6.9 and $7. Clearing this barrier would allow the bulls to attack the resistance at the 200-day MA.

What’s Next for Nio?

Nio’s recent downturn was quick and painful, yet its path to recovery appears considerably more challenging. A significant factor is the EV maker’s difficult journey toward profitability, among other things.

In the 12 months leading up to September 30, Nio reported a significant loss of 21.4 billion Chinese yuan ($3.02 billion) against revenue of 54.6 billion Chinese yuan ($7.70 billion), translating to 39 cents lost for every dollar earned.

The company’s vehicle margin declined to 11% in Q3 2023, down from a peak of 20.1%, while Tesla’s automotive gross margin also dropped to 18.7% from 27.9% in the same quarter the previous year.

This contrasted with Tesla’s $1.76 billion operating profit in Q3 2023 and Nio’s $664 million operating loss. To break even in Q3 2023, Nio would have needed 6 billion yuan in vehicle sales, more than double its sales for the quarter.

Still, it’s not all doom and gloom. The carmaker ended 2023 on a high note, delivering 18,012 in December, up around 13% from a month prior. During Q4, Nio delivered 50,045 units, just below its quarterly high of 55,432.

Looking ahead, the company is broadening its manufacturing scope by introducing sub-brands, targeting the more affordable vehicle segments. Nio estimates it holds a significant share of over 40% in the ultra-premium market.

There is both a bull and bear case for Nio. Which do you think will prevail in 2024? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.