Connect with us

Energy & Critical Metals

Nio Stock Has Some Headwinds, But They Appear Navigable

Current shareholders have every right to be frustrated by the performance of Nio (NYSE:NIO) stock this year.
Source: Sundry Photography / Shutterstock.com
After…

Share this article:

Published

on

This article was originally published by Investor Place

Current shareholders have every right to be frustrated by the performance of Nio (NYSE:NIO) stock this year.

Source: Sundry Photography / Shutterstock.com

After accelerating 1,173% in 2020, the company’s stock has been a basket case over the past eight months, falling 24% to its current price of about $38.

The shares are now down 40% from their all-time high of $66.99 reached in late January.

As the main electric vehicle company in China and the primary rival of Tesla (NASDAQ:TSLA), investors are rightfully wondering what it will take to turn around Nio’s share price and get it climbing again.

The latest positive news related to Nio stock came at the tail end of August when it was announced that the company will take a minority stake in Lotus Cars, the iconic and extremely high-end British sports car manufacturer.

Lotus, which is majority controlled by rival Chinese automaker Zhejiang Geely, is looking to raise $2.3 billion in order to “transform itself into an all-electric brand.”

Nio isn’t investing the entire $2.3 billion, but it is investing some money and is being given a slice of Lotus Cars in return. Lotus said it and Nio “will explore collaboration in areas including high-end intelligent EVs.”

The investment in Lotus Cars, which Zhejiang Geely has said it plans to take public as soon as next year, is positive for Nio.

However the collaboration pans out, Nio should be able to generate positive returns from its investment through the licensing of various technologies.

Another opportunity for positive returns is through Lotus’ eventual initial public offering (preliminary estimates have pegged Lotus’ value at $15 billion).

Collaborating with Lotus could also help Nio enter the world of ultra-high-end luxury sports cars, which is a lucrative and exclusive global market.

Record Orders and Nio Stock

Like all automakers, Nio is grappling with the ongoing shortage of semiconductors and microchips that has hobbled production this year.

Nio cited the chip shortage recently when reporting lower than expected sales figures for August that came in at 5,880 vehicles, down from 7,931 cars sold in July. 

However, the company also reported that its new orders reached a record high in August, demonstrating that demand for its electric vehicles remains strong.

Still, Nio revised down its third-quarter delivery forecast from between 23,000 to 25,000 vehicles previously to between 22,500 to 23,500, again due to the chip shortage.

Nio has also beefed up its plans to expand in Europe, announcing that it plans to open dealerships in five additional countries after launching in Norway, its first foray outside of China.

The company plans to begin deliveries of its ES8 large SUV in Norway this month and then move into Germany, the United Kingdom and elsewhere across the continent.

The company has received approval to begin mass production of its various electric vehicles on the European continent, opening up a major new market that should power future sales growth.

Ongoing Challenges

While Nio has achieved a lot of wins this year in terms of strategic investments and its plans for global expansion, the company continues to face some ongoing challenges.

The global shortage of semiconductor chips is the biggest issue currently affecting Nio, but the company is not alone.

Major automakers such as General Motors (NYSE:GM) and even rival Tesla have been forced to cut their vehicle production in recent months due to their inability to secure the critical chips needed to manufacture today’s cars, trucks and SUVs.

Analysts expect some relief from the semiconductor shortage next year.

A more uncertain issue that could have an effect on Nio is the political situation in China. Government officials in Beijing have been cracking down this year on major Chinese companies in the technology, cryptocurrency and education sectors in an effort to better distribute wealth.

The goal is to achieve what politicians are calling “common prosperity” in the nation of 1.4 billion people.

So far, government regulators haven’t targeted the domestic automotive industry, which remains comparatively small and comprised mostly of start-up companies such as Nio. But if the situation changes, it could prove problematic for Nio and its shareholders.

Be Cautious With NIO Stock

Nio has a lot working in its favor right now – the Lotus cars investment, a record number of orders for its vehicles and an expansion into Europe that looks very promising.

At $38 a share, the stock offers a nice entry point for investors at its current price. Over time, NIO stock should rise considerably.

In the near term, the company faces some uncertainty with the global chip shortage and political volatility in China.

As such, investors should proceed with caution regarding Nio shares. Start with a small position and add to it over time if a rally in the share price breaks out. If the stock falls further, be prepared to sell quickly.

Disclosure: On the date of publication, Joel Baglole 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.

Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia. 

More From InvestorPlace

The post Nio Stock Has Some Headwinds, But They Appear Navigable appeared first on InvestorPlace.

Articles

Drilling kicks off and uranium analysis planned at Benmara battery metals project

Special Report: Resolution Minerals has started drilling at its Benmara battery metals project in the Northern Territory. … Read More
The post Drilling…

Share this article:

Resolution Minerals has started drilling at its Benmara battery metals project in the Northern Territory.

The 2,500m RC drilling program is focused on the highest priority targets of 4km and 2km strike length derived from a VTEM survey – and new Geoscience Australia research which identified prospective rock types previously mis-mapped.

The large-scale targets are prospective for sediment hosted battery metals including copper, silver, lead, zinc, and cobalt.

Plus, the targets are on the margin of the South Nicholson Basin and Murphy Inlier on the Fish River fault which is analogous and along strike from Aeon Metal’s (ASX:AML) polymetallic Walford Creek deposits (40 million tonnes at 2% copper equivalent).

It presents the company with strong exposure to the strengthening demand for battery metals – and a tightening market for copper.

And because the targets have no prior drilling, Resolution Minerals (ASX:RML) is confident this underpins the potential to rerate on any discovery made.

 

Fully funded to ramp up exploration

Resolution is fully funded to complete the drilling with existing cash following a recent $1.7 million placement.

“We are very excited to announce drilling has started on our maiden drill program at the under-explored Benmara Battery Metals Project in the Northern Territory,” managing director Duncan Chessell said.

“The program follows up large scale targets derived from our recent VTEM geophysics survey for sediment hosted stratiform copper and other battery metals.

“With virtually no prior drilling conducted into these large-scale targets, we look forward to the results of this exciting opportunity and accelerating exploration.”

The drilling will take three weeks to complete, with assays expected in early November.

Pic: The company holds the Wollogorang and Benmara copper-cobalt-uranium projects in the NT, which includes the Stanton cobalt deposit.

Assessing uranium upside off the back of strong prices

The area surrounding Benmara is also highly prospective for uranium, with the 51.9-million-pound Westmoreland Uranium deposit nearby.

Additional uranium occurrences have also been mapped within 2km of the Benmara tenement boundaries.

And with rising uranium spot prices close to US$50/lb – a nine-year high – it puts the company in a good position to assess the uranium potential of the project.

 

Wollogorang project potential

Then there’s the company’s Wollogorang project in the McArthur Basin in the NT, which is prospective for sedimentary hosted battery metals: copper, cobalt, and hard rock uranium.

There’s proven mineralisation within the Stanton cobalt deposit of 942,000 tonnes at 0.13% cobalt, 0.06% nickel, 0.12% copper.

And a VTEM survey highlighted the sediment hosted copper potential, identifying 40 conductors.

Plus, drill targets at the Gregjo copper prospect are set to test a chargeable IP geophysical anomaly underlying copper mineralisation intersected in shallow RAB drilling of up to 4% copper.

The project is subject to a $5 million farm-in agreement with OZ Minerals (ASX:OZL) to earn 51% interest, after which the company can retain 49% by participating.

Or at Resolution’s election, OZ has the option to earn 75% interest by sole funding to a final positive decision to mine, with Resolution appointed as operator.

 

 

Resolution Minerals share price today:


This article was developed in collaboration with Fresh Equities, a Stockhead advertiser at the time of publishing.

 This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

 

The post Drilling kicks off and uranium analysis planned at Benmara battery metals project appeared first on Stockhead.

Continue Reading

Energy & Critical Metals

Why Nio Stock Needs Some Help When It Comes to the Charts

The electric vehicle (EV) trade has finally cooled off, which is a good thing given how far it had run. It would be hard for Tesla (NASDAQ:TSLA) to justify…

Share this article:

The electric vehicle (EV) trade has finally cooled off, which is a good thing given how far it had run. It would be hard for Tesla (NASDAQ:TSLA) to justify a trillion dollar market capitalization or for these revenue-less SPAC stocks to keep soaring higher. Meanwhile, Nio (NYSE:NIO) is somewhere in between, with NIO stock performing quite well but not exactly on Tesla’s level.

Source: Robert Way / Shutterstock.com

At least, not yet.

In order to get there, the company will need to continue its domestic expansion in China and work on expanding globally. Tesla has been trading pretty well lately as it works on consolidating its massive gains over the last 18 months.

For Nio, though, the charts aren’t all that great right now. Combined with a high valuation, that has me on guard with the stock. For Nio, it needs the technicals to work in its favor in order for the stock to be attractive.

Trading Nio Stock

Daily chart of Nio stock
Click to Enlarge
Source: Chart courtesy of TrendSpider

A look at the chart highlights the recent struggles for Nio stock. Shares bottomed in early May along with most other growth stocks, as the bear market in this group came to end.

Nio ripped back toward $55 and the 61.8% retracement, but ultimately failed to hold those gains. It later failed to hold its major moving averages, while giving us an “ABC” correction down to the weekly VWAP measure.

This measure had been decent support throughout 2021.

However, after its rally back to the 21-day and 21-week moving averages, NIO stock gave us the “D” leg of that correction, resulting in the recent flush lower. We now see the stock below the weekly VWAP reading, as bulls scramble to see whether Nio can find its footing

If it can, we need to see Nio stock reclaim the August low at $36.24, as well as the weekly VWAP level. As of now, it’s currently undergoing a “monthly-down rotation” so long as it’s below $36.24. Back above those measures, and the high $30s could be in play.

On the downside, though, it’s possible we see the $31 to $32 area again. This area has been support twice amid two nasty corrections in Nio stock this year.

As a whole, Nio stock has been a leader amid growth stocks when the group is hot. But it has not done too well lately and it shows on the charts. So if the overall market struggles, this stock may too.

Breaking Down Nio

So many people will point to the fundamentals of a company like Nio without taking into consideration the valuation. Granted, I don’t put a lot of weight in the valuation either. At one point, valuations played a much larger role in the way that stocks behaved.

However, I think a few things have altered some of that Benjamin Graham thinking.

First, tech stocks blew the market wide open. No longer were companies having to follow traditional paths with only decent margins. Now software companies can routinely generate massive profit margins, while the tangible addressable markets (TAM) are significantly larger.

That’s allowed valuations to expand as well.

Second, the Fed’s low-rate and easy-money policies have forced investors to plow funds into equities. The returns in bonds (particularly internationally) and fixed income have dried up, forcing investors to chase returns in growth stocks — like Nio.

Is it healthy? Not necessarily, but this has been our reality for quite some time and it will likely remain that way for the foreseeable future.

I’m not calling for some great reckoning. A stock like Nio can continue to go up as long as it continues to deliver. But that remains a question mark.

While the company reported solid quarterly results last month, Nio’s July and August monthly auto deliveries disappointed investors. Furthermore, Nio was forced to trim its third-quarter delivery expectations.

Throw in Nio’s plan to raise $2 billion in stock, and it creates even more pressure on the stock price.

The Bottom Line on NIO Stock

It’s not that I have any specific gripe against Nio, but the facts are simple. For an automaker, the stock commands a high valuation and the company doesn’t have enough momentum in its underlying business right now. Thus, we need to see beat-and-raise quarters and delivery results in order to spur the stock higher. In line and disappointing results aren’t going to cut it.

Second, the charts don’t look very good. Back above $36.25 and my tone will change a bit. Otherwise, I remain defensive on Nio stock for the time being.

On the date of publication, Bret Kenwell 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.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell.

More From InvestorPlace

The post Why Nio Stock Needs Some Help When It Comes to the Charts appeared first on InvestorPlace.

Continue Reading

Energy & Critical Metals

ChargePoint Stock Deserves to Double from Here

Even with the electric vehicle revolution in full swing, not everyone sees the bull thesis for ChargePoint (NYSE:CHPT). Indeed, CHPT stock was cut in…

Share this article:

Even with the electric vehicle revolution in full swing, not everyone sees the bull thesis for ChargePoint (NYSE:CHPT). Indeed, CHPT stock was cut in half from the the beginning of 2021 to mid-September, so clearly investor sentiment is at a low point.

Source: YuniqueB / Shutterstock.com

This could present an opportunity for folks with a tolerance for volatility. After all, the essence of contrarian investing is to get excited when others are fearful.

Could the pessimism surrounding CHPT stock be misplaced? The answer is probably yes, since the U.S. government is leaning toward policies that should benefit ChargePoint.

That, along with the company’s impressive revenue growth, indicate the share price is lower than it ought to be. Over the long run, this situation should correct itself, leading to excellent returns for patient shareholders.

A Closer Look at CHPT Stock

There’s something about the $20 price point — it’s like a magnet for CHPT stock in 2021.

Without a doubt, this must be frustrating for the long-term stockholders. As you may recall, ChargePoint shares propelled as high as $44.50 in January of this year.

The sentiment was riding high, but it wasn’t the best time to take a long position. CHPT stock slipped to $20 in March.

Believe it or not, the stock rose and fell back to that same $20 level in April, and then again in May, and once more in August. As of Sept. 23, it was back to $20 and change yet again.

At least we can say there’s strong support at that level.

The sellers can’t expect to fend the buyers off forever. $30 and eventually $40 are reasonable price targets — CHPT has been there before, and the bulls can anticipate a revisit of these price levels.

ChargePoint Can Electrify the Nation

One great thing about investing in ChargePoint is that it allows you to be brand-agnostic.

To put it another way, you can hold the stock and be part of the vehicle electrification movement without betting on any specific automaker.

Yet you’d still have to believe in the future of electric vehicles. It’s a reasonable sector to invest in — at least, Bank of America analyst Martyn Briggs seems to think so.

As you may be aware, President Joe Biden’s administration aims to have 50% of vehicles produced in the U.S. be electric by 2030.

To achieve this ambitious goal, according to Briggs, “you’re going to need to see a lot of up– of supply-chain shifts. Obviously a lot of manufacturing capacity, huge amounts of battery manufacturing in particular to achieve that that we can come to.”

It’s not difficult to connect the dots and see how an electric vehicle charger maker like ChargePoint would benefit from this.

Briggs makes no bones about it: “Net-zero targets are real, and they’re not going away.” And if the government is going to enforce a transition to zero-carbon, zero-emission mobility, Briggs considers vehicle electrification “an obvious low-hanging fruit.”

More Ports, More Revenues for CHPT Stock

Speaking of low-hanging fruit, the CHPT stock bulls can simply point to ChargePoint’s outstanding second-quarter 2021 fiscal data. In a time when the government hopes to advance vehicle electrification, ChargePoint is making strides on the financial front.

For the second fiscal quarter, ChargePoint grew its revenue by 61% year-over-year. Plus, for the full year, the company raised its revenue guidance by 15% to a range of $225 million to $235 million.

Moreover, ChargePoint’s network of charging stations is expanding quickly. The company’s count of activated ports exceeded 118,000 as of July 31. And by the by, this is a global phenomenon — ChargePoint counted more than 5,400 of its charging ports in Europe.

It looks like the Biden administration is going to push hard for vehicle electrification. This should provide a long-term tailwind for ChargePoint. Is this a guarantee that CHPT stock will rally in the short term? Definitely not, as near-term price fluctuations are bound to happen.

But as Briggs said, the net-zero targets are real. They’re not going away, so investors must adjust their strategies accordingly. Given the company’s impressive fiscal data, an informed investor’s strategy could certainly include a position in ChargePoint.

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.

More From InvestorPlace

The post ChargePoint Stock Deserves to Double from Here appeared first on InvestorPlace.

Continue Reading

Trending