NIO Looks Attractive Down Here

Chinese electric vehicle (EV) maker NIO NYSE: NIO stock staged a summer rally that peaked out shares near $55 before the steady sell-off resumed despite hitting 116% YoY growth in June 2021 deliveries. China’s most prolific consumer electric vehicle (EV) manufacturer is growing at a rapid pace. The global decarbonization movement has fueled the race for clean energy solutions and the competition if fierce with automobiles. The European Union proposed an end to internal combustion engines by 2035. While the EV momentum seems to have stalled especially in light of the global semiconductor shortage, the future looks bright as the narrative still remains valid. EVs are set to provide some of the most technologically advanced end-user experiences. Prudent investors seeking exposure to the EV sector can watch for opportunistic pullbacks in shares of NIO for exposure. 

Q1 2021 Earnings Release

On April 30, 2021, NIO released its fiscal first-quarter 2021 results for the quarter ending March 2021. The Company reported revenues of $1.218 billion, up 482% year-over-year (YoY). Gross profit was $237.3 million, up 36,2% sequentially from Q4 2020. Gross margins were 19.5% compared with (-12.2%) in Q1 2020. Net loss was (-$68.8 million) in Q1 representing a 73.3% decrease from Q1 2020. Basic diluted net loss per ADR was (-$0.48) in Q1 2021. The Company ended the quarter with $7.3 billion in cash and short-term investments. NIO CEO William Bin Li stated, “NIO started the year of 2021 with a new quarterly delivery record of 20,060 vehicles in the first quarter, representing a strong growth of 422.7% year over year. The overall demand for our products continues to be quite strong, but the supply chain is still facing significant challenges due to the semiconductor shortage. In light of the strong momentum under a volatile macro environment, we expect to deliver 21,000 to 22,000 vehicles in the second quarter of 2021.” He also detailed the Power Swap stations, “In April, we celebrated the 100,000th production vehicle rolling off the line together with our users and partners. Meanwhile, we started to deploy our Power Swap stations 2.0, which could significantly boost the service capacity of each station to maximum 312 times per day by shortening the battery swapping time to under three minutes. In addition, to improve the swapping and charging experience of underserved users in North China, we announced the Power North plan at the Shanghai Auto Show. We have always been committed to providing a superior holistic EV experience to our users with better products and services.

NIO CFO Comments

CIO CFO Steven Wei Feng add, “We have achieved another great quarter with strong financial performance in the first quarter of 2021. Mainly driven by higher deliveries and solid average selling price, our vehicle margin reached 21.2% in the first quarter. Moreover, we continued to achieve positive cash flow from operating activities for the first quarter of 2021. Going forward, we will continue to invest in new products and core technologies, as well as in our service and power network expansion, particularly battery swapping and charging facilities.”

June 2021 Deliveries

On July 1, 2021, NIO announced the June 2021 delivery figures. NIO delivered 21,896 vehicles, up 116.1% YoY. The deliveries consisted of 1,498 of the six-seater flagship premium ES8s, 3,755 ES6 five-seater high-performance SUC, and 2,830 EC6 five-seater smart electric coupe SUV. Cumulatively, the Company has delivered 117,597 ES8, ES6 and EC6 electric vehicles.

NIO Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frame provides a broad view of the landscape for NIO stock. The weekly rifle chart uptrend peaked near the $54.91 Fibonacci (fib) level. Shares fell sharply back under the weekly 5-period moving average (MA) support at 46.14 as the weekly stochastic crossed back down under the 80-band. The weekly market structure high (MSH) sell triggers under the $38.43 level. The weekly lower Bollinger Bands (BBs) are near the $28.91 fib with upper BBs near the $52.88 fib. The daily rifle chart is downtrending with a falling 5-period MA at $44.17 pointing to daily lower BBs near the $39.21 fib. The daily stochastic has a low band mini inverse pup at the 10-band. The daily market structure low (MSL) buy triggers on a reversal through the $47.01 level. Prudent investors can watch for opportunistic pullback levels at the $41.33 fib, $39.21 fib, $36.34 fib, $34.31 fib, $31.53 fib, $30.51 fib, and the $28.91 fib. Keep an eye on Chinese EV peers XPEV and LI as they move together. Upside trajectories range from the $52.68 fib up towards the $73.83 fib.