NIO: The Chosen One

Stocks

For full disclosure I have been purchasing NIO since it was in the low $7 range. I have averaged up twice bringing my total share average to $9.01. I’m not saying this to brag or flaunt my diamond hands. I’m sharing this information because it’s important to know why a smart investor (at least I’d like to think I’m smart) would hold onto a position well beyond 500% and feel comfortable continuing to hold that position with the recent price fluctuations. 

NIO is being touted as China’s own Tesla Motors. This may or may not be true. One thing that NIO has done exceptionally well where Tesla failed is their battery-swapping tech. So as a buyer of a NIO fleet vehicle you have the option to purchase with our without a battery. If you choose not to purchase a battery you can sign up for a battery subscription service by paying a monthly fee and use one of NIO’s battery swap-stations to exchange your run down battery for a fully charged one. Think of it like a gas station but with batteries instead. 

This is smart of NIO to pursue this type of program especially in China where most individuals aren’t living in large houses with the ability to install a charging station directly into their garage wall. For that reason alone NIO seems like a better choice for an EV vehicle if you are living in densely populated areas with little to no space. Looking at you China! 

NIO also understands that while people are paying for the subscription service - sometimes they just don’t drive. How many times have you gone a full month barely pulling up your Netflix account? Yet you’re still paying for Netflix. NIO’s subscription service keeps customers paying month to month even after that initial sale. This is great! 

China’s market share on a global scale is massive and one thing China does often is promote and back their own companies over US. While Tesla has entered into the Chinese market it doesn’t mean they are going to overtake the Chinese EV companies. China is very competitive and loves to win and get out on top. Leaving all politics aside we can’t deny this to be true. In my opinion China wants to produce EV companies that not only compare with Tesla but overall outperform and take a bigger piece of the EV-pie. 

In my dumb monkey brain I’m thinking China isn’t going to let their precious EV companies fail. Li, Xpeng & Nio are their EV babies right now. While this article is about NIO I also have strong positions in both LI and XPENG and I believe these are also great buys as well.

China has stated that they want 25% of all new vehicles sold in the country to be electric by 2025. Currently EV sales are only contributing to about 5%. So in the next four years we’re going to see an EV boom all across China. That means the government would likely be installing more charging stations across the country and possibly kickbacks for citizens who purchase EV.

It’s no secret that the emissions in China are insane. It sure would be nice for China to be able to come out in a few years and say, “Hey look at how much we improved.” I believe this is exactly what’s going to happen especially when you really look at the policies the Chinese government has put in place for electric vehicles vs. combustion engine vehicles.

So, now that we have the fundamentals out of the way let’s take a look at NIO’s chart and you all can see why I’m even more excited about NIO:

The recent market correction has brought NIO into oversold conditions that haven’t been since since October 2019 when the price was $1.23. Sure, the stock has had sell offs and it has encroached on oversold areas in the past but recently it got hit harder than ever before.This tells me a couple of things:

  1. A lot of profits were taken.

  2. The big boys upstairs unloaded and naturally are waiting for the little minnows to offload their profits before boarding this train for the second come up.

When I first started writing this article a couple of days ago the price of NIO was $32 and that’s when I started averaging up. The last three trading sessions have been good for NIO and it has seen a 40% increase in price. Absolutely bananas! You might be thinking, well if it has gone up that much why would I want to get into this off technicals? The answer is simple: MFI Don’t Lie! 

The MFI(Money Flow Index) operates like clockwork. Don’t believe me? Do your own research and go add the MFI to any stock. Look at the daily chart. Hell, look at the hourly chart. MFI provides insanely accurate entry and exit areas. Hindsight is 20-20 though. It’s easy to look at a stock and see how MFI played out. Does it work every time? No. Of course not. If it did then we’d all be retired on the beach sippin silly drinks with little umbrellas in them.

There is still so much more room for the MFI to run in NIO. In my personal opinion we’re going to see a new high coming for NIO soon. 

Standard Risk: Buy NIO $40-$50

Riskier: Buy NIO LEAP’s for Dec 17 2021 or Feb 18, 2022 or do a Vertical Spread to limit the risk a tad. An example: Buy Oct 15th $45 Call Sell Oct 15th $55 Call

Balls to the Wall Risk: May 21 $45 Call (Currently priced $6.33)

Are you Fucking Insane: APR 1 $45 Call (Currently priced $3.45)

Jesus Take the Wheel: MAR 19 $45 Call (Currently priced $2.11)

There you have it folks. Again, this isn’t financial advice it’s just the opinion of one investor to another. I hope you enjoyed this break down. If you enjoyed this post please like and comment below. You can also subscribe via email to be the first to know when new posts come out as we will have more to come in the future.