PreMarket Prep Stock Of The Day: Nio Stock Powers Down After Q4 Earnings

Only one noteworthy earnings report came after the close on Thursday, and it was from Nio Inc. NIO.

The corresponding price action in the electric vehicle stock before and after the report make it the PreMarket Prep Stock of the Day.

Buyer Beware: It's extremely difficult to be a Wall Street analyst and try to determine a company’s potential earnings and the trajectory of its price. It is even more difficult to go on CNBC ahead of a company’s earnings report and predict the short or long-term price action of an issue.

After the close on Thursday, Deutsche Bank analyst Edison Yu appeared on CNBC before Nio's fourth-quarter report. In his opinion, the recent volatility and decline in Chinese ADRs may have created a buying opportunity in Nio for the long term.

Aggressive Buyer: Seizing on the comments from Yu, which were intended for the long-term, investors aggressively purchased Nio shares in after-hours trading. It should be noted the price action took place on heavy volume that continued until the actual report was released at 6 p.m. 

Interestingly, the rally peaked at $22.97, was just above Nio's current high for the week at $22.60

Nio's Q4 Report: After the close, the company announced a fourth-quarter adjusted EPS loss of 16 cents per share, which beat the expected loss of 21 cents. Also, the company had a slight sales beat of $1.55 billion vs. a $1.53-billion estimate. Delivery guidance for the first quarter missed Wall Street’s expectations, weighing on the issue. 

See Also: Nio Reports Q4 Beat, Hints At Reacceleration In Growth In 2022

PreMarket Prep's Take On Nio: When the issue was being covered on the show, it was trading at the $21 area. Co-host Dennis Dick said Nio just had a major rally from $13.60 to $22.60 in six days, "and it seems overbought to me."

The author of this article alerted investors that if the issue was unable to hold the premarket low of $20.60, there may additional downside ahead. 

NIO Price Action: After a lower open ($20.33 vs. $21.98), Nio attempted to rally but found sellers just above the bottom of Thursday’s range ($20.66) at $20.75 and resumed its mover lower.

It has continued to make new lows for the session, with the current one being $19.35 as of 12:30 p.m., and is attempting to rebound. The stock is trading down 9.96% at $19.79 Friday afternoon. 

The discussion on Nio from Friday’s PreMarket Prep show can be found here:

Photo courtesy of Nio.