Will Nio Stock Continue To Rally After Gaining 14% Last Week?

Nio stock (NASDAQ: NIO) is up by almost 14% over the last week (five trading days) and currently trades at just above the $50 per share mark. The gains are driven by a couple of factors. Firstly, EV stocks appear to be back in favor with investors after a big sell-off earlier this year, and Nio stock, along with rivals such as Tesla and Li Auto, has seen some gains over the past few days. Secondly, Nio is slated to provide its delivery numbers for June shortly, and investors could be buying into the stock in anticipation of stronger numbers, as the worst of the semiconductor shortage is now apparently behind the company. Separately, Nio is slated to hold its Nio Power Day event on July 9, where the company is likely to show off improvements to its EV charging products and services – an area where the company has been a big innovator.

So will Nio stock continue to trend higher over the coming weeks and months, or is a correction looking more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company's historical stock price data, returns for Nio stock average 18% in the next month (21 trading days) period after experiencing a 14% rally over the last five trading days . The stock is also likely to outperform the S&P 500 over the next month, with an expected return that would be 16% higher compared to the S&P 500.

But how would these numbers change if you are interested in holding NIO stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test NIO stock chances of a rise after a fall and vice-versa . You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!

MACHINE LEARNING ENGINE – try it yourself:

IF NIO stock moved by -5% over 5 trading days, THEN over the next 21 trading days, NIO stock moves an average of 4.4%, with a 51.6% probability of a positive return over this period.

Also, given a -5% movement for the stock over 5 trading days, it has historically witnessed an excess return of 2.3% compared to the S&P500 over the next 21 trading days, with a 48.9% percent probability of a positive excess return

Some Fun Scenarios, FAQs & Making Sense of NIO Stock Movements:

Question 1: Is the average return for Nio stock higher after a drop?

Answer:

Consider two situations,

Case 1: Nio stock drops by -5% or more in a week

Case 2: Nio stock rises by 5% or more in a week

Is the average return for Nio stock higher over the subsequent month after Case 1 or Case 2?

NIO stock fares better after Case 2, with an average return of 4.4% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 16.9% for Case 2.

In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise .

Try the Trefis machine learning engine above to see for yourself how Nio stock is likely to behave after any specific gain or loss over a period.

Question 2: Does patience pay?

Answer:

If you buy and hold Nio stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.

Overall, according to data and Trefis machine learning engine's calculations, patience absolutely pays for most stocks!

For NIO stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

Question 3: What about the average return after a rise if you wait for a while?

Answer:

The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although NIO stock appears to be an exception to this general observation.

NIO's returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:

It's pretty powerful to test the trend for yourself for Nio stock by changing the inputs in the charts above.

Electric vehicles are the future of transportation, but picking the right EV manufacturer stocks can be tricky. Investing in Electric Vehicle Component Supplier Stocks can be a good alternative to play the growth in the EV market.

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