There’s no denying it. Last wasn’t a blockbuster for investors of Chinese electric-vehicle (EV) maker Nio (NYSE:NIO). Sure, there were some nice pops along the way, but NIO stock definitely has some catching up to do.
Most likely, this share-price drawdown wasn’t Nio’s fault. For one thing, there was (and still is) a chip shortage going on, which has generally hindered the global automotive market.
Along with that, there was an unwinding of the over-hyped demand for EV stocks. Frankly, NIO stock and other similar stocks went up too far, too fast, and a pullback was probably necessary.
If anything is going to put Nio back on track, it’s the company’s delivery data. Plus, a recent nod from a prominent big-bank analyst should get the bulls charging this year.
A Closer Look at NIO Stock
What a shame it would be if NIO stock coughs up all of its gains since the summer of 2020. Hopefully, the share-price pullback won’t go that far.
That being said, the stock’s ride from $7 to $62 was overdone. As the old saying goes, trees can’t just grow straight to the heavens, and stocks can’t just go up forever.
NIO stock attempted to find its footing in the mid-$20s earlier this month. There was some support at $21 from late January that didn’t look super-firm at the time. A breach of $20 would have been problematic for the shareholders. Fortunately, it’s knocking on $26 now.
The overhead resistance levels are at $42 and $50, so don’t hesitate to take profits if the stock gets there. After all, greed is bad for your financial health.
The Bears Can’t Touch These Numbers
Now, some folks might try to construct a bearish thesis about Nio, based on the January downward trajectory of the share price. We can look at the company’s fundamentals to counter the technical problems, though. Suffice it to say that fundamentally, Nio is a thriving business.
Not long ago, Nio issued a vehicle delivery update indicating that it delivered 10,489 vehicles, for a 49.7% year-over-year increase in December 2021.
Not only that, but in the fourth quarter of 2021, Nio delivered 25,034 vehicles. That’s a new record-high quarterly delivery for the company and signifies a year-over-year increase of 44.3%. Need more data ammo? No problem, as Nio just served up another delivery update to get the bulls revved up.
In January, Nio delivered 9,652 vehicles, which represents a year-over-year improvement of 33.6%. It also released the Aspen 3.0.5 NO vehicle model. The company stated that this model is exclusively developed for the local Norway market – a sign that Nio is expanding internationally.
A Rare Opportunity
Those numbers alone strengthen the argument that NIO stock deserves to stage a powerful comeback. If you need an analyst’s stamp of approval, however, then check this out. Reportedly, Barclays analyst Jiong Shao called the setup for Chinese EV stocks a “rare opportunity.”
Shao cited the rapid adoption of EVs in China, supportive government policies for EV purchases and booming sales at Chinese EV makers. EV penetration of new-car sales in China was around 15% in 2021. That’s much higher than the country’s 6% EV penetration recorded in 2020.
With all of that in mind, Shao issued an ambitious $34 price target for NIO stock – a rare opportunity, indeed, for today’s investors.
The Bottom Line
Could Nio turn out to be the comeback kid of 2020’s EV market? It’s entirely possible, and sometimes investors have to look to nations outside of the U.S. to find the best deals.
Really, it’s not a problem that 2021 was a lackluster year for NIO stock. That’s only a setup for what could be a spectacular comeback.
So, don’t hesitate to check the latest delivery stats and Shao’s positive note. If you jump into the trade, just be sure to take some profits at $50, if and when the Nio share price gets there.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
