NIO, XPEV trades | 🟩

NIO: Poised for a Bullish Run Amidst Declining Interest Rates

NIO and XPEV are both Chinese electric vehicle (EV) manufacturers that are considered to be among the leading players in the industry. NIO was founded in 2014 and is headquartered in Hefei, China. XPEV was founded in 2014 and is headquartered in Guangzhou, China.

Both NIO and XPEV produce a range of premium EVs, including SUVs and sedans. They both have a strong focus on innovation and technology, and they are both committed to developing autonomous driving capabilities.

NIO and XPEV have both been growing rapidly in recent years. 

In the volatile world of tech stocks, NIO has consistently demonstrated a sensitivity to interest rate expectations. With inflation moderating and recent economic data pointing towards lower interest rates, NIO is primed for a strong performance in the coming months.

NIO's historical performance has shown that it thrives in environments where interest rates are expected to decline. The recent rally in May 2023, where NIO surged 100%, is a testament to its ability to capitalize on such conditions. While the stock often experiences pullbacks after such rallies, the underlying fundamentals remain robust, suggesting that NIO is well-positioned for continued growth.

Technical indicators further support the bullish case for NIO. The formation of a double bottom pattern on the weekly chart suggests a potential reversal of the recent downtrend. This bullish signal, coupled with the favorable macroeconomic environment, paints a bright picture for NIO in the near future.

Of course, no investment is without its risks. The reversal of trends in major indices, a strengthening US dollar, and unexpected geopolitical events in East Asia could all invalidate the bullish outlook for NIO. However, the current macroeconomic conditions and technical indicators suggest that the odds are in NIO's favor.

In comparison to NIO, XPEV's recent decline has been less severe, indicating greater resilience. While XPEV's stronger business results make it a more attractive long-term investment, NIO's potential for significant gains in the short term makes it a compelling option for traders.

Overall, NIO is poised for a bullish run in the coming months, driven by declining interest rates and favorable technical signals. While risks remain, the potential rewards make NIO an attractive speculative opportunity.

Bears,Freinds&Co hold long positions in both assets.

Update from 8.02.2024

Increased long exposure to both assets. 

Update from 11.04.2024

To quote Investorplace website's artircle with the title "

7 Meme Stocks to Sell in April Before They Crash & Burn": 

"

NIO is a meme stock that has also lost its appeal as the one to watch for the weak, and further risks of capital depreciation I feel are very real. It has already lost 47.96% of its value over the past year, and it seems likely that it will drop further due to the structural weaknesses in China and its shaky fundamentals. I therefore recommend that investors steer clear of NIO, and also designate it as one of those meme stocks to sell."

The performance over the last year has been negative 47.96%, as the article states. The performace since reaching all time high on January 17, 2021, has been an abysmal negative 93%. An investment in NIO at this point is a bet on company's ability to survive and avoid bankruptcy. It's a risky bet, but one that might pay off beautifully if we happen to be right. Our current allocation to NIO and XPEV sits at around 10% of our total equity.