Nio (NIO)

Oct 26, 2022Trade Ideas

Long-term investors may want to pay attention to Nio (NIO).

After plummeting from about $22 to less than $9 a share, the stock has become wildly oversold. It’s also over-extended on RSI, MACD, and Williams’ %R.

Part of the reason for the drop are concerns about Chinese President Xi Jinping’s third term. With that, investors are fearful that it could be bad for the economy. According to Enodo Economics’ Diana Choyleva, “Investors are now repositioning for a China where Xi Jinping rules supreme in an echo chamber of sycophants. For him, ideology and national security trump all other considerations, including growth,” as quoted by The Wall Street Journal.

At the same time, the NIO pullback appears to be overkill at this point.

We also have to consider NIO is expanding internationally, and that its monthly delivery numbers are still impressive. In fact, according to the company, “NIO delivered 10,878 vehicles in September 2022. The deliveries consisted of 7,729 premium smart electric SUVs including 1,895 ES7s, and 3,149 premium smart electric sedans including 2,928 ET7s and 221 ET5s. NIO delivered 31,607 vehicles in the third quarter of 2022, increasing by 29.3% year-over-year and achieving record-high quarterly deliveries. Cumulative deliveries of NIO vehicles reached 249,504 as of September 30, 2022.”

From a current price of $10.80, we’d like to see the NIO stock again test $16.

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