Home Forex NIO is starting to rebound after Wednesday’s 10% plunge

NIO is starting to rebound after Wednesday’s 10% plunge

by SuperiorInvest
  • Covid restrictions have dampened demand and output in China.
  • Goldman Sachs has downgraded China’s economic growth through 2023.
  • NIO shares fell 10.3% on Wednesday.

Shares of Nio (NIO). again, he makes the best of a bad situation. NIO shares advanced 4.4% to $19.10 on Thursday morning after losing more than 10.3% to close at $18.30 on Wednesday. While Fed signaling that interest rates would be higher for longer shipped USA stocks On Wednesday, Nio faced a number of headwinds unrelated to the U.S. central bank.

Read also: MULN shares hit another all-time low, reverse split inevitable

Nio stock news

First, Goldman Sachs lowered its outlook for the Chinese economy for 2023. The main reason was that the government in Beijing is now expected to continue its zero covid policy through much of the next year. This has already led to lower output levels, a supported logistics industry and inconsistent supply chains. Goldman now sees China’s GDP growing at 4.5% next year, down from an earlier projection of 5.3%. At least that number is still higher than the 3% expected in 2022.

Second, China’s semiconductor slump continues. In August, China reported a year-on-year drop in chip production of nearly 25%. This happened after a decrease of 16.6% in July. Chip performance in China rarely drops two months in a row. This slump is believed to be affecting automakers such as Nio, Xpeng (XPEV), and LiAuto (LI).

The the strong US dollar is still a problem, but companies like Nio are not big exporters yet. If it were a stronger dollar, it would also potentially help its exports by artificially lowering the price of final products. Nio recently shipped a battery exchange station to Germany, but the company remains in the early stages of overseas growth.

According to an article in The Wall Street Journal earlier in the week, The China Passenger Car Association reported that “new energy vehicles” accounted for 30% of sales in August and would likely reach 55% of all annual sales by 2025.. However, due to rising costs, it would likely take longer for Nio and other EV makers to reach profitability.

Nio stock forecast

Nio shares remains stuck in no man’s land. Stock is year-on-year decrease of 44%.. Since reaching the high in late June with resistance at $24, NIO fell as low as $16.54 on September 7. The upper line resistance seems harder to break than the lower support line, as NIO traded as high as $11.67 on May 12.

NIO shares have not closed higher than $24.08 since February 17 (June 24)., and that makes this resistance area a must-run for any longer-term bull rally to develop. For now, NIO seems destined for a rebound between $16.50 and $24 some time until the automaker significantly cuts losses, establishes a higher growth profile, or the dark clouds of China’s poor economy lift.

The Relative Strength Index (RSI) has not reached an oversold or overbought level since May (four months ago!). This is another example of the market giving in to either bear or bull stories and instead downgrading Nio to the status quo. That’s quite a long way from 2020, when Nio broke through 1,200%.

NIO Daily Chart

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