- Nio stock price retreated after publishing its strong results.
- The Tesla rival is doing well, with its sales and gross margins soaring.
- It has formed a cup-and-handle and a bullish flag pattern.
Nio stock price retreated sharply, reaching its lowest level since February 27 this year. It has now slipped by 20% from its highest point this year, moving to a technical bear market. Still, the Tesla rival may stage a strong comeback after flashing bullish patterns.
Nio Stock Dropped After Swinging Into a Loss
Nio, a top Chinese Tesla rival, dropped after publishing its financial results, which demonstrated its strong growth. Its results showed that its revenue jumped by 112% in the first quarter to over $3.7 billion. This growth happened as the vehicle deliveries jumped to 83,465, up from 42,095 in the same period last year.
These results demonstrated that it was one of the fastest-growing companies in the EV industry. In contrast, BYD’s revenue growth dropped by 30% in the first quarter. XPeng, Li Auto, and Polestar experienced much lower revenue and delivery growth in the quarter.
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The results showed that the company’s gross profits jumped by 428% to $704 million. Its margin jumped to 19% from the previous 7.8%, a sign that the company is making major improvements.
However, the company made a net loss of $48 million, a quarter after it made over $40 million in profits. Excluding some major expenses like share-based compensation, its profits jumped to $6.3 million.
Nio expects that the company’s growth will continue to grow in the coming months. The main catalyst will be NIO ES9, which will start deliveries next week. It will have more advanced features, including artificial intelligence tools, and will be the successor to the highly successful ES8.
At the same time, the company launched the ONVO L80 brand, which started deliveries on May 15. In a statement, the CEO said:
“We expect total deliveries in the second quarter to range between 110,000 and 115,000 vehicles, with a year-over-year growth of 52.7% to 59.6%.”
Technical Analysis Suggests that Nio Share Price Will Soar
Nio stock has pulled back in the past few weeks. Still, technical analysis suggests that the stock will bounce back in the coming days. For one, the ongoing retreat is part of the bullish flag pattern, which is made up of a vertical line and a descending channel.
The retreat is also part of the handle section of the cup-and-handle pattern, a common continuation sign. This cup has a depth of 37%. Measuring the same distance from the cup’s upper side gives the target price at $9.56, which is up by 70% from the current level.
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