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What’s behind Nio stock’s stunning 1-day rally? Is $5 NIO round the corner?

What’s behind Nio stock's stunning 1-day rally? Is $5 NIO round the corner?

Once heralded as the future of the car industry, the electric vehicle (EV) sector has been overtaken by hybrids in 2024 and has suffered significant damage with dwindling sales and a stock market performance akin to a free fall.

Nonetheless, the industry has offered some surprises this year as it offered a sudden Lucid Motors (NASDAQ: LCID)-led rally towards early February and an unexpectedly strong report offered by the very same company in early April.

Another interesting fact has been that, throughout the year, Chinese EV makers have been, as a rule of thumb, outperforming their American counterparts on the stocks side with April 9 bringing two 1-day rallies seemingly out of the blue – Nio (NYSE: NIO) and XPeng (NYSE: XPEV).

With the two car makers finding themselves 7.78% and 9.35% in the green respectively, the question became: what drove the 1-day surge?

Why did Nio and XPeng surge?

While the reasons aren’t entirely clear, and it may be that both companies’ protracted decline finally reached a reversal point as investors saw an opportunity, there are several likely contributing factors.

The more general one comes in the form of Treasury Secretary Janet Yellen’s visit to China during which she might have calmed many traders by stating that a decoupling of the economies of the two powers is neither practical nor pending.

Nio has also announced a strategic partnership with the home appliance company called Midea (SHE: 000333) focused on cooperation in the fields of automotive parts, logistics, digitalization, and other services, and opened its first smart driving technology center in Germany.

At the same time, XPeng has announced significant steps to accelerate its presence in Hong Kong and Macau with plans for a May debut possibly helping drive its rally.

Nio stock price chart

While Nio stock’s 1-day performance, which saw it climb 7.78% in a single session to the latest closing price of $4.71, and helped it break the otherwise weak weekly performance, its longer-term fortunes are substantially worse. 

NIO stock 5-day price chart. Source: Finbold

Indeed, since the start of the year, the Chinese EV maker declined 44.06% and the trend is visible in the monthly chart as the shares are 22.79% in the red in the time frame. Nio price today stands at $4.69 after a 1.49% decline in Wednesday’s premarket.

Finally, despite the latest rally not appearing substantial in the grand scheme of things, it presents Nio with its first major opportunity to hit its next resistance level of $5.10 in months thus reclaiming a value above $5.

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