NIO Inc. Faces Mixed Action, Holds Below Moving Averages Amidst EV Competition and Negative EPS

Technical Analysis

On the technical front, NIO Inc. closed at $7.79 on November 2, 2023, increasing by 4.56%. The volume of 42.95 million shares was less than the average volume of 47.54 million shares. The 14-Days Relative Strength Index (RSI14), which measures the speed and change of price movements, was 39, indicating a neutral position. Moving averages, used to smooth out price trends, showed that the stock's 50-day moving average of $9.10 was above the 200-day moving average of $9.69, indicating bearish sentiment. The stock price is also lower than both averages, further signifying bearish trends.

The Moving Average Convergence Divergence (MACD), used to signal buying or selling possibilities, was -0.38 for the last three months, confirming downward pressure. Average True Range (ATR), a technical analysis volatility indicator, was 5.46, suggesting a high level of volatility.

The stock demonstrated a low point, or support, at $7.69, and had a resistance level, or high point trading range, at $8.55.

It should be noted that the stock hit an annual high of $16.18 and an annual low of $7.

Fundamental Analysis

Considering the fundamentals, NIO Inc. has a current market cap of $13.86 billion. However, the stock's earnings per share (EPS) was negative at -1.77, resulting in a negative P/E ratio of -4.4. This suggests the company is not profitable. Also, there were approximately 1.78 billion outstanding shares.

The Discounted Cash Flow (DCF), indicating the value of anticipated future cash flows, was at $19.94, notably higher than the current stock price. Additionally, analysts did not predict a strong buy, but indicated 16 buy and 4 hold recommendations with a consensus assumption of "Buy". Target price estimates ranged from a low of $13 to a high of $83, with median and consensus values of $31.3 and $35.15 respectively.

In terms of recent news, the reports on the EV revolution in China are favorable, suggesting widespread adaptation of EVs mainly from unidentified brands. It was also reported that NIO, along with other Chinese EV companies, had positive October delivery figures, which could be a potential catalyst for stock growth. Despite NIO's October vehicle deliveries rising nearly 60% from the same period a year ago, there was news that its rivals reported stronger growth. This could potentially put pressure on NIO's market share and its stock value.

Forecast And Recommendation

Considering both technical and fundamental aspects, along with recent news reports, NIO inc's stock could see mixed action in the next trading day of November 3, 2023. The stock price could experience volatility with mixed sentiment but is likely to maintain above its support level of $7.69.

In the upcoming week, it could be expected that the stock price may attempt to test its resistance at $8.55, if supported by positive market sentiment and strong industry performance. The robust October sales numbers could act as a catalyst, even though competition pressure persists. However, the overall dwindled price compared to moving averages and negative earnings details might weigh on the stock's performance in the short term.

Actual stock movement will depend on overall market conditions and the broader EV sector sentiment, which can be influenced by a multitude of unforeseen factors.

Given these conditions, the final evaluation categorizes NIO Inc. as a Hold. This is based on the prevailing bearish technical indicators, unprofitability as indicated by negative EPS, and intense competition in the Chinese EV market as evident from the news. Contrarily, strong October delivery figures, a general "Buy" consensus from analysts, and a higher DCF value relative to the current stock price could create an opportunity for potential upside in the long-term. Thus, a position could be maintained until future favourable conditions for a 'Buy' arise or when the fundamentals signify a 'Sell'.