NIO Limited stock analysis: could the stock’s performance leave Tesla in the dust?

The NIO Limited share price analysis shows the correction could be over and the stock may start its next up-move

The electric vehicle industry is expected to witness hyper-growth in the next few years and several companies are trying to play catch up with the indisputable leader Tesla. NIO Limited (NYSE: NIO) is one of the many companies, which aims to garner a large part of the market share in the EV industry.

While an upcoming industry receives high valuations for its future potential, the markets also look for companies in the sector that are living up to expectations. Analysts watch the vehicle deliveries to keep track of the auto company’s progress. 

NIO delivered 20,500 EVs in 2019 and 43,729 in 2020. The analysts anticipate sales to grow 107% in 2021. Even though the automakers have been hit by chip shortages this year, NIO has managed to maintain its high deliveries. In Q1 2021, the company delivered 20,000 units, a 423% year-on-year growth.  

The Chinese automaker’s first-quarter earnings report is scheduled for 29 April. Analysts estimate the company to reduce its loss from 25 cents in Q1 2020 to 16 cents in Q1 2021. The earnings call by the company will be keenly watched for any new announcements of products or services.

NIO is expected to expand operations in Norway in early May, to get a foothold in Europe. These steps show that the company is keen to increase its market share and emerge as a strong competitor to Tesla. The company will have to sustain its high growth trajectory to justify its high valuations.

Will NIO Limited stock go up? Let’s perform the NIO Limited stock price analysis of the weekly chart to find out.

NIO Limited share price technical analysis – weekly chart

NIO stock weekly

The NIO Limited share price was one of the star performers last year. It rallied from the March 2020 lows of $2.11 to an all-time high at $66.71 in January of this year, clocking a 3,061% gain in less than a year.

However, since hitting the all-time high, the stock witnessed profit booking and corrected 52% to hit $31.75 on 1 March. The bulls bought this dip and have successfully defended the level in the past few weeks. 

The buyers will now try to make $31.75 as a base and start the next leg of the up-move, which can retest the $61.80 to $66.71 overhead resistance zone. A breakout of this zone could clear the path for a possible move to $85.40.

Conversely, a break below $31.75 could signal the start of a new downtrend. The NIO Limited stock price analysis of the weekly chart shows the stock is trying to form a base at $31.75. Let’s perform the NIO stock analysis of the daily chart to spot any tradeable setups.

NIO Limited share price technical analysis – daily chart

The stock has formed a symmetrical triangle. The bears broke the price below the support line of the triangle on 15 April, but the bulls bought the dip and pushed the price back into the triangle on 16 April.

After a minor hesitation on 19 and 20 April, the stock broke above the 20-day EMA on 21 April. That was followed by further buying, which pushed the price above the resistance line of the triangle on 22 April.

The breakout of the triangle has a pattern target of $55. However, it is unlikely to be an easy ride for the bulls because the bears are likely to mount stiff resistance at the 50-day SMA and then again at $45.90. Above this level, the next hurdle could be $51.78.

If the price turns down from the 50-day SMA, the stock could again drop to the support line of the triangle and then to $31.75.

NIO Limited stock: buy or sell at these levels?

The NIO Limited share price analysis shows the bulls are trying to start a new uptrend. Traders could consider buying on a successful retest of the breakout level with the stops placed below $33.50. 

On the contrary, if the price turns down and breaks below the 20-day EMA, it will suggest that traders are closing their positions on rallies. In such a case, traders could wait for the stock to form a bottom before entering long positions.

 

Trade NIO Limited – NIO Limited share price

NIO Limited
Daily change
35.19
Low: 35.03
High: 35.91

FURTHER READING: S&P 500 technical analysis: time to book profits?

FURTHER READING: Palantir stock analysis: the bears may be planning a serious assault

 

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