Nio stock jumps in Hong Kong after key EU news as a risky pattern nears

Nio stock price jumped by over 2% in Hong Kong, continuing a cautious recovery that started on Friday. It rose to a high of $38 after a proposal by the European Union that may help boost sales of Chinese EVs in the region. 

EU considers plan to replace tariffs on Chinese vehicles

Nio and other Chinese EV companies rose in Hong Kong and Beijing after a report suggested that EU officials were considering a minimum price system to replace import tariffs. Such a move would be highly positive for these companies as it would boost their sales and profit margins.

The plan will see Chinese vehicle companies submit their plans on their minimum import prices, annual volume limits, and future investments in the region. Such a move will remove the 35% tariff that these companies pay today.

Nio, a top Chinese manufacturer, would benefit from access to the European market, where it has attempted to gain market share over the years.

Europe is an ideal market because of its huge population of over 600 million people, who are much wealthier than those in other places. It would also help it to diversify its business from China, a country whose market has become highly saturated, with companies like Xiaomi, SAIC, XPeng, and Li Auto competing for market share.

Nio deliveries are doing well 

In a recent note, Nio said that its business was doing well, with demand for its vehicles continuing the uptrend. 

The company said that it delivered 48,135 vehicles in December, up by 54.6% from the same period a year earlier. It sold 124,807 vehicles in the fourth quarter, up by 71% YoY. This growth brought its annual deliveries to 326,028 vehicles, up by 47% YoY.

In contrast, Tesla delivered 418,227 vehicles in the fourth quarter, a 16% plunge from the same period in 2024. The company delivered over 97,000 vehicles in China in December.

Nio’s growth is being driven by ES-8, its sports utility vehicle (SUV), which has surpassed 40,000 deliveries, making it one of the fastest growing models in its category.

The most recent quarterly results showed that Nio made $3 billion in revenue in the third quarter while its gross margin jumped to 13.9% from the previous 10.9%.

Still, the main challenge that Nio faces is that its business has never been profitable, which has pushed it to raise money and dilute its shareholders. The company recently raised over $1.16 billion by selling American shares.

Nio stock price technical analysis 

The daily timeframe chart shows that the Nio share price has been in a strong downward spiral in the past few months, moving from a high of $61.80 in October to the current $37.

It has formed a head-and-shoulders pattern, a common bearish reversal pattern, a common bearish reversal sign. 

The stock is about to form a death cross, which happens when the 50-day and 200-day Exponential Moving Averages (EMA). This pattern is one of the most bearish chart patterns in technical analysis.

Nio has also invalidated the double-bottom pattern at $37.80 and the neckline at $42.9. A double-bottom is one of the most common bullish reversal chart patterns.

The stock has now moved below the 61.8% Fibonacci Retracement level at $38.6. Moving below this level is important as most rebounds normally happen at this point.

Therefore, the most likely Nio share price forecast is bearish, with the next key support level to watch being at $32, the 78.7% Fibonacci Retracement level, which is 16% below the current level.

The post Nio stock jumps in Hong Kong after key EU news as a risky pattern nears appeared first on Invezz