NIO delivered 6,131 vehicles in February 2022, an increase of 9.9% over the previous year. As of February 28, 2022, cumulative deliveries of ES8, ES6 and EC6 reached 182,853 vehicles. The business of the Chinese EV group is therefore confirmed as growing. The news is also good that the NIO stock is now present with its Class A common shares on the Stock Exchange of Hong Kong: a necessity probably linked to the issue of the possible delisting of the American ADR. In this regard, the best news comes from China as the Chinese government has announced never-before-seen monetary and fiscal policy operations to support the Chinese economy as well as announced to also support foreign-listed securities, such as NIO.
NIO [NIO] closed on Friday at $20.26 (-2.9%). Today, in the pre-trading, it is +3.2%. After the highs in the $70 area, the stock started a sharp decline that led it to break the 61.8% Fibonacci retracement at $26.28. The break confirmed NIO’s weakness by initiating further falls to the low of $13, with a loss from the highs of more than 80%. The first signs of recovery in strength have come in the last few sessions even if there is still a long way to go. On Friday, the stock broke the resistance of $20 at the end of the session with high volatility and a good dose of volumes. In pre-trading, we see profit taking today. Here, the more aggressive can already open LONG positions while the more conservative can wait for confirmation between now and the next few days to see if it will exceed $20. We point out that if you put together a weekly chart, bullish engulfing is evident and also confirmed by the volumes (see graph below). We point out that the bullish engulfing on the weekly is also present on indices on Chinese stocks, which is a very important signal for the sector.
We recommend going LONG on the stock, especially on the overcoming of $20 at the end, by buying the Leverage Shares 3X NIO ETP (ISIN: XS2399365472) also listed on Borsa Italiana for a short term targets of around $26. Alert/stop loss should be below $18 (daily closing). From an investment perspective, however, we highlight the stock tracker certificates with 1x leverage (ISIN: XS2337093871).
