It was only last month that I wrote NIO Stock at $10: Is It Closer than It Seems? NIO (NYSE:NIO) is now trading 35% above $10. This stupendous rise in the stock can be attributed partly to the company’s strong sales and momentum trading.
Is there more upside for the stock after the recent rally? We’ve previously discussed what could extend the current rally. However, the more pertinent question may be how much steam is left. After hitting $10, is $20 the next stop for NIO stock?
Pricing and pre-order details for NIO’s EC6
Usage details of NIO’s credit facility
Chinese news website CGTN reported on July 10 that NIO China had secured a credit facility worth 10.4 billion yuan from six Chinese banks. The company has not yet disclosed how it is going to use these funds. While the financing arrangement of 7 billion yuan with the Hefei government reached in April helped the company address liquidity issues, the new funds could help the company grow further. The funding usage details, therefore, could be a positive catalyst as well.
The next catalyst for NIO stock
The usual deliveries report for July could be another positive catalyst. Two consecutive months of record sales helped ignite the current stock rally. The continuation of this pattern in July could confirm consistent sales growth, thereby boosting the stock. The company usually announces its monthly deliveries data in the first week of the subsequent month.
Waiting for positive gross margins?
NIO has guided for positive gross margins for Q2 2020, which could pave the way for the company to achieve positive net profit. Furthermore, the company sounded confident on its margin guidance during its June deliveries release. A positive and wider-than-expected margin could be another positive stock catalyst.
The upside for NIO stock from here
If these catalysts materialize, NIO stock could easily surpass $20. Investors should, however, note that in the short term, technical factors could overtake fundamentals, which could mean some pullback in the stock. Such profit-taking after a huge rally is completely normal.
Moreover, there are risk factors, including rising geopolitical tensions, that could pressure the stock. For a detailed discussion of NIO’s fundamental factors, read Is NIO the Next Short-Seller Killer after Tesla and Nikola?