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NIO Stock Is Ready to Jump Out of the Gate, So Get In

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A couple of years ago, Chinese electric vehicle (EV) maker Nio (NYSE:NIO) was widely considered a long shot, or perhaps an EV-market also-ran. Pessimism was the prevailing sentiment and NIO stock was quite cheap.

A Nio (NIO) sign outside of the company's facilities in Shanghai, China.

Source: Andy Feng / Shutterstock.com

It has been a veritable roller-coaster ride since that time. From the emergence of multiple Covid-19 variant strains to critical supply shortages, the EV industry has had its fair share of ups and downs.

NIO stockholders who held on have been rewarded for their patience. The share price is much higher today than it was a two years ago, but the stock has been on a downtrend lately.

Does this mean that it is time to cut and run? After some analysis and consideration, you’ll probably be convinced to stay in the trade as in the long run, the bulls should be in the driver’s seat.

A Closer Look at NIO Stock

On Mar. 9, 2022, NIO stock spiked 12% and settled at $20.17. This is important because the buyers will definitely want to defend the psychologically significant $20 level. Ultimately, they’ll want to target the 52-week high of $55.13. This might seem like a fantasy, but $55 could actually be achieved in 2022.

That is because NIO stock is volatile and is capable of going up as quickly as it has gone down. The stock has a five-year monthly beta of 2.47, meaning that it has historically been a fast mover in both directions.

Let’s not get ahead of ourselves, though. If the buyers can push the share price above $25 and keep it there for a while, that would be a technical victory and perhaps even a stepping stone to higher price points.

Giving it a Test-Drive

Heading into March of 2022, Nio was already riding high on the company’s outstanding February vehicle delivery update.

Just to sum it up, Nio delivered 6,131 vehicles in February, representing a 9.9% year-over-year increase. Plus, the company reported delivering 15,783 vehicles in full-year 2022, signifying a 23.3% year-over-year improvement.

This was already great news — no doubt about it. Better yet, Nio revealed that it had “adjusted the production lines to prepare for the delivery of ET7 in March 2022.”

So, here we are in March. Are automotive enthusiasts lining up to try out Nio’s flagship electric sedan?

Indeed, they are. Reportedly, On Mar. 5, the ET7 electric sedan was ready to be test-driven at NIO House, located in Hefei, Anhui province, China. Apparently, Nio started off by allowing 300 test drives per day. However, the company plans to increase this to 1,000 daily test drives.

The Reviews Are In

So far, there has been strong demand for these ET7 test drives and for pre-orders of the vehicle. CnEVPost, which received an invitation to test-drive the ET7, reported that the sedan model “is receiving a lot of positive reviews after its test drive begins.”

According to Nio (via CnEVPost), the test-drivers were impressed with the ET7’s acceleration and handling performance. We can also assume that they liked the ET7’s new seat design, 256-color ambient lighting and immersive sound system.

And, here is where it gets a little bit crazy. CnEVPost reported that people were selling ET7 pre-orders for double or even triple what they had initially paid. The deposit for an ET7 was set by Nio at 5,000 RMB. It was stated that someone had offered to re-sell an ET7 reservation order for 15,000 RMB.

We could call this a rip-off — but then, we could also say it is a good sign for Nio.

The Bottom Line on NIO Stock

If ET7 reservation orders are in high demand. That is a signal that Nio is in growth mode.

Still, some traders might be hesitant to make an investment now. After all, when a stock is falling, buying is scary.

Yet, NIO stock could be overdue for a turnaround. A revisit of $55 could happen surprisingly soon, especially as the ET7 could be an EV-market game changer.

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.

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