Nio
A NIO EP9 electric supercar of NextEV is on display during the 15th Optics Valley of China (OVC) International Expo in Wuhan city, central China’s Hubei province, 14 November 2018. Chinese automaker Nio showed off its electric sports vehicle EP9 at the Optics Valley of China International in Wuhan City, Hubei Province, which kicked off on November 14, 2018. The vehicle can run without a driver and can accelerate up to 100 km/h in 2.7 seconds. *** Local Caption ***

Nio stock price spiked on Friday after the Tesla challenger acquired a new European Whole Vehicle Type approval for its Nio ES8 brand. The shares rose to a high of $45.73, which was the highest level since March 15. It now has a market capitalization of more than $57 billion, according to data compiled by Webull.

Nio European expansion

For starters, Nio is a fast-growing Chinese electric vehicle company that manufactures the et7, ec6, es8, and es6 brands primarily for the domestic market. After going through a difficulty period a few years ago, the company managed to make a comeback after receiving a sizable investment. As a result, at its peak this year, the Nio stock price was up by almost 6,000% from its highest level in 2019.

Nio has a real potential, especially in the domestic market, where sales for EVs are expected to reach 2 million this year and 6.2 million in the next four years. The biggest challenge the company faces is the rising competition from the likes of XPeng and Tesla. It also faces supply challenges as the ongoing semiconductor shortage accelerates. Indeed, recently, the company announced that the numbers for April declined because of the shortage.

Nio stock rose on Friday after the company announced its entry to the vast European market. It expects to deliver its first car to Norway in Seprember this year. This is a notable issue since Europe is also a leading consumer of electric vehicles. Still, the company faces a tough competitive challenge competing with the likes of Daimler, BMW, and Tesla. 

Analysts are generally bullish on Nio. In a recent report, analysts at BOCOM International boosted the outlook of the stock to $57. Similarly, analysts at Citigroup, Mizuho, and Deutsche Bank expect the Nio stock price will rise to above $60 in the near term. And in a recent note, an analyst said:

“One of the best things about NIO is that it already has a dominant position in the Chinese EV industry and it also has a solid balance sheet, as its cash reserves at the end of Q1 stood at $7.2 billion, while it had only $1.59 billion in long-term debt.”

Nio stock price prediction

Nio stock price
Nio stock price chart

Turning to the daily chart, we see that the Nio share price has bounced back by almost 50% from its lowest level in May. The stock has also managed to move above the 38.2% Fibonacci retracement level. Most notably, the 50-day and 25-day moving averages are attempting to make a bullish crossover pattern. Also, it is attempting to move above the neckline of the double-bottom point at $46.27. 

Therefore, in my view, the stock’s bullish break out will be confirmed if it manages to move above this neckline. If it happens, the shares will likely keep rising, with the next key level to watch being at the 23.6% retracement at $51.

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