Nio stock price has made a steady recovery in the past few months as investors remain optimistic about the company. The stock is trading at $20.18, which is about 75% above the lowest level this year. This recovery has pushed its market cap to over $33 billion. Other EV stocks like Tesla, Xpeng, and Mullen Automotive have all bounced back.
Why is Nio recovering?
There are several reasons why the Nio stock price has done well in the past few months. First, China has reopened its major cities after locking them in the past few months. As a result, the country’s economy has done relatively well during this period.
Second, after going parabolic earlier this year, the cost of key commodities has dropped sharply in the past few months. The Bloomberg Commodity Index (BCOM) has dropped by more than 10% from its highest point this year. The same is true with vital metals used in the EV industry like nickel and steel.
Third, Nio has seen its deliveries jump in the past few months. Nio delivered 10,052 vehicles in July this year, up by about 26.7% on a year-on-year basis. The deliveries were about 13,000 lower than those in June because of the lockdowns in major cities. Analysts expect that Nio will boost its deliveries as supply chain issues ease.
Fourth, Nio has expanded to Europe, where it received a license to operate in 2020. This week, the company said that it will launch its power products for the European market. The new plant will be in Budapest, Hungary.
Nio stock price forecast
The four-hour chart shows that the Nio share price formed a strong double-bottom pattern at $12.45 in March and May of this year. Since then, it has managed to bounce back and is trading at $20.18. The current price is slightly below June’s high of $24.46. It is also along the 25-day and 50-day moving averages and has formed a falling wedge pattern.
Therefore, outlook for the Nio stock price is still bullish, with the next key resistance level to watch being at $24.46, which was the highest point in June. This view will become invalid if the stock drops below the support at $18.10.