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Nio Shares Rise For Sixth Straight Session: What's Behind The Momentum?

Shanthi Rexaline

Nio Inc – ADR (NYSE: NIO) shares have been broadly on an uptrend since they hit a 52-week low of $2.35 in mid-June.

The electric carmaker, often referred to as China's Tesla Inc (NASDAQ: TSLA), had a disappointing first half this year thanks to a decline in first-quarter sales, a reduction in electric vehicle subsidies announced in late March and general macroeconomic weakness in China exacerbated by tthe Sino-American trade standoff.

The automaker had to contend with concerns surrounding battery fires that forced it to recall about 5,000 SUVs in China.

Winning Streak Continues 

Although Nio shares have been staging a steady recovery since the mid-June lows, the momentum has accelerated since the start of July.

Since July 1, the stock has advanced in each session, with the winning streak extending to its sixth session Tuesday.

A solid thrust came from second-quarter production and delivery numbers Tesla released after the close July 2. Nio climbed about 11% in sympathy July 3.

Nio has climbed a cumulative 50% over the six sessions.

The stock is finding solid support at its 50-day simple moving average, or SMA.

nio_0.png

Source: Yahoo Finance

What The Future Holds 

Nio, which markets the ES8 and ES6 SUV electric cars, has seen rising sales but faces pressure in the near-term from mushrooming local competition and the threat posed by Tesla.

The company is likely to continue to bleed at least for three years, although its negative margins could shrink from negative 7.3% to a negative 2.2%, Caixin reported, quoting an Everbright Securities analyst.

Nio shares were trading higher by 5.44% to $3.68 at the time of publication Tuesday. 

Related Links:

Large Bullish Options Bets Placed On Nio

Nio Is In A Good Spot To Take China's EV Market, But This Analyst Says Valuation Already Reflects That

Photo courtesy of Nio. 

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