NIO Stock Price and Forecast: Tumblnig on plans to offer 60 million American depositary shares

NYSE: NIO is heading for a third consecutive day of gains after falling the previous week.
Investors are dismissing fears that the potential delisting of Chinese firms would impact Nio Inc.
Hopes for a US stimulus deal are boosting broader stock markets.

Update: NYSE: NIO shares are falling on Friday following the carmaker's announcement to offer no fewer than 60 million American depositary shares. Premarket trading is pointing to a drop of 5.53% or $2.50, more than erasing a 2.75% gain recorded on Thursday. Nio Inc is not the only firm trying to take advantage of sizzling hot markets – Elon Musk's Tesla is set to float some $5 billion of stock and shares similarly lost value. The moves follow successful IPOs by AirBnB and DoorDash, which saw elevated demand and post-listing surges.

These fluctuations could eventually make way for examining Nio's fundamentals, which look upbeat after its latest shipments of vehicles last month. Investors await data for December for the next fundamental – and not knee-jerk – move. In the bigger scheme of things, YSE: NIO is trading in a narrowing range at this is set to make way for a more directional move. More Where next for the Fed, fiscal stimulus and Trump

NYSE: NIO is changing hands at a minor gain of 0.30% or $0.13 in Thursday's premarket trading after rapidly reversing its gains on Wednesday and ending 5.4% in the red. The chart shows that Tuesday's peak is below the previous swing high – a bearish sign, but that Wednesday's low is above the trough. This narrowing wedge reflects lower volatility and according to technical textbooks, a significant explosion is likely.

Where will Nio's shares move to? The main reason for Thursday's fall came from a lawsuit against Facebook, alleging abusive monopoly powers. The broad NASDAQ index dropped amid fears of further regulatory and level action. However, stocks, especially those at the cutting edge such as in the electric vehicle sector, are finding fresh demand on Thursday. Moreover, the focus on Facebook drives attention away from worries about the potential delisting of Chinese firms described below.

What comes down must go up – perhaps not fast, but shares of Nio Inc (NYSE: NIO) are bouncing from the lows as bargain-seekers have jumped in. The Shanghai-based electric vehicle firm's shares are on course to rise by 1% on Wednesday, hitting $47.

That would complete a near $4 and close to 10% from the low of 43.04 recorded on Friday. Shares are still below the peak of $455.38 recorded on November 23 and under the 52-week high of $57.20.

What is behind the recent recovery?

NIO stock news

NYSE: NIO's advance is mostly related to a rethink of the fall – Shares of the carmaker dropped after Congress advanced a bill that requires Chinese firms to align themselves with American accounting standards or face delisting from US stock exchanges. While the legislation is still in the works and would only come into full effect in 2023, the move could shutter Nio's access to capital markets. Growth in the EV sector requires substantial investment.

Nevertheless, the considerable downfall triggered second thoughts – is the firm close to delisting? The answer is probably not. Despite bipartisan support for the bill, it could still be watered down – and conversely, Nio could adjust its books.

Moreover, the EV-maker may not need additional funds, as its car deliveries are thriving. The reason for the previous advance of NYSE: NIO shares came from an upbeat report on vehicle sales, a factor that is bringing cash to the company.

Another factor that is aiding the recovery comes from stimulus hopes in the US. Democrats and Republicans are not only uniting against China but for a relief package that would inject funds into the economy. Hopes for a fresh shot in the arm – alongside the FDA's upcoming greenlight for the Pfizer/BioNTech vaccine – are boosting markets. Nio's cars accelerate well and shares could rise in response – regardless of the origin of the manufacturer.

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