Sign InNIO Inc. Stock Evaluation: Hold Recommendation With Potential Upside
Summary
As of June 26, 2023, NIO's technical analysis suggests that its stock is neither overbought nor oversold and may trade between 8.45 USD and 8.60 USD, while its fundamental analysis shows a negative earnings per share (EPS) and a Price-to-Earnings (PE) ratio of -6.09, resulting in a Hold recommendation, despite recent positive news such as a 738.5 million USD investment from Abu Dhabi.
Technical Analysis
As of June 26, 2023, NIO Inc. closed at 8.40 USD (-0.03; -0.36%). The stock has traded between a price low of 8.40 USD and a price high of 8.69 USD in the last trading session, with the year low and year high being 7.00 USD and 24.43 USD, respectively. Its current market capitalization stands at 14.71 billion USD. The trading volume reached 33.22 million shares, below its average volume of 51.47 million shares. The Relative Strength Index (RSI14) is calculated at 59.00, and the 50 Day Moving Average stands at 8.28 USD. Meanwhile, the 200 Day Moving Average is calculated at 10.89 USD, and the 3-month Moving Average Convergence Divergence (MACD) is 0.2132.
Fundamental Analysis
NIO Inc. currently has an Earnings per Share (EPS) of -1.38 USD and a Price-to-Earnings (PE) ratio of -6.09. There are a total of 1.75 billion shares outstanding, and the next earnings announcement is expected on September 5, 2023. The discounted cash flow (DCF) for NIO Inc. is 20.55 USD. Analysts' target consensus, high, low, and median estimates for the stock are 35.15 USD, 83.00 USD, 13.00 USD, and 31.30 USD, respectively.
News Analysis
Recent news reports suggest that Tencent has cut its stake in NIO stock by 25%, resulting in an 8% ownership stake. China introduced a new package of EV tax breaks to stimulate sagging electric vehicle sales, which initially caused a spike in shares of NIO Inc. NIO's management reportedly does not believe that battery swapping should be a free service, and experts opine that the company needs to recalibrate its strategy due to various headwinds affecting the Chinese EV market.
On a positive note, NIO secured a 738.5 million USD investment from Abu Dhabi in June, which could potentially lead to an Abu Dhabi-based production hub for NIO's electric vehicles down the road. The UAE market is seen as increasingly attractive for EV companies due to the growing electric vehicle adoption.
Stock Price Prediction
Taking the technical indicators into account, NIO's current RSI level implies that the stock is neither overbought nor oversold. The MACD, being positive, indicates a potential upward trend in the short term. Considering its average trading volume and recent DCF value, we predict that the stock price for the next trading day, June 27, 2023, may trade within the range of 8.45 USD and 8.60 USD.
Regarding the upcoming week's stock performance, the stock may experience an upward trend based on the 50 Day Moving Average. Consequently, there is a possible increase in the stock price, reaching levels around 8.35 USD to 8.65 USD.
Final Evaluation
Given NIO's recent investment from Abu Dhabi, the Chinese EV tax breaks, and its current technical and fundamental analysis, we assign a Hold recommendation for the stock. Although the stock price may experience an upward trend in the short term, investors should carefully monitor various news events, management decisions, and market trends that could impact the company's value in the long run.
