Nio stock price primed for big moves as it enters the “harvest season”?

Nio stock price could be on the cusp of a strong bullish breakout after forming a highly bullish pattern and, as the CEO touts the upcoming “harvest season” when it starts to realize the returns of the recent investments. It was trading at $4.8 on Friday, up sharply from the year-to-date low of $3. 

Nio stock price technical analysis

The daily timeframe shows that the Nio share price formed a double-bottom pattern at $3.37 in April and June this year. This is one of the most common bullish reversal patterns in technical analysis.

Nio stock has already crossed the upper side of the double-bottom pattern at $4.45, confirming its bullish momentum. It has then formed another positive pattern known as a bullish pennant, which comprises of a vertical line and a symmetrical triangle pattern.

The distance from the upper side of the triangle to its lowest side is about 41%. Measuring the same distance from the potential breakout level gives it a target price of $6.90, much higher than the current level. 

Additionally, the Nio share price has formed the highly bullish golden cross pattern as the 50-day and 200-day Weighted Moving Averages (WMA) crossed each other. This pattern formed on August 1.

The Supertrend indicator has also turned green, a sign that the bullish momentum is strong. However, a drop below the support level at $4.10, the 200-day WMA, will invalidate the bullish Nio stock forecast.

Nio is entering the “harvest season”

One reason the Nio share price has collapsed in the past few years is that it has recorded significant losses. Its losses were much higher than those of the other companies in the EV industry like Li Auto and XPeng.

Data shows that the company had a net loss of over $3 billion last year, higher than the $2.9 billion in 2023 and $2.093 billion in the previous year. 

These losses have prompted management to raise billions of dollars, resulting in substantial shareholder dilution. It spent all these funds developing its main brand and launching new ones. 

Now, the company is starting to focus on profitability after spending years focusing on growth. In a statement, the CEO said:

“So in the second half of this year, actually since 2019, it means we have entered a harvest period. The investment, this cycle of accumulated investment, enters its harvest period this year.”

There are signs that the results are starting to show up. In a recent note, the company said that its deliveries rose by 17.5% in June to 24,925, bringing the second-quarter gains to 72,056, a 25.6% increase. 

The surge was due to the new launches of the ONVO and Firefly brands, which have become highly popular among users. 

In a statement on Monday, the company said that it would expand its offerings to countries like Singapore, Uzbekistan, and Costa Rica. It recently announced its entry into other markets like Austria, Belgium, the Czech Republic, and Poland.

International expansion is a major priority for Nio and other Chinese markets now that the Chinese market is highly saturated, with companies like XPeng, Li Auto, BYD, and Great Wall fighting for market share with price reductions. 

Analysts are highly optimistic about the Nio stock and its earnings. The average revenue estimate among analysts is RMB 19.74 billion, up by 13% from the same period last year. The company is expected to make RMB 90.28 billion this year. 

Read more: Nio stock price could enter beast mode, thanks to these catalysts

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