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After more than 13x the increase last year, is the party over for the China EV play Nio (NYSE: NIO) action?

Nio is starting to drop after hitting all-time highs of nearly $ 67 So far the drop hasn’t been that massive ($ 67 to $ 55) But there are good reasons why it could continue

First, with the ability to ‘go downstairs’ with new EV games, investors can continue to profit from Nio and convert their earnings into new positions. Second, as the competition grows ‘Steps Up in Its Chinese Home Market, Fast-Growing Electric Vehicle Maker May Fall Short of Today’s Huge Expectations

With both factors on the table, stocks look more likely to fall than jump in the future Keep this in mind before buying after the recent pullback

This EV startup may have gone public in 2018 But it wasn’t until 2020 that investors got really hot The mad rush in this EV game came on the heels of investors who made a bid for it. purchase of Tesla shares (NASDAQ: TSLA)

Yet it wasn’t just its potential to become the ‘next Tesla’ that got investors excited for Nio stock. With its operational performance improving by leaps and bounds, triple-digit delivery growth has helped to justify the multiple parabolic movements of the upward action

Even factors indirectly impacting Nio’s prospects played a role in shifting the needle For example, the election of President Joe Biden is hardly a game-changer for this China-based EV maker But the epic post-election rally of EV stocks has spread to this name as well

But, even if the growth of the company may partially justify its current valuation (85 USD6 billion), further gains could be out of reach for the share Nio Why? With a hot new EV stock on the block, some of the excitement that propelled this stock to new highs may start to wear off

I’m talking about Churchill Capital IV (NYSE: CCIV), which is getting closer to its alleged merger with electric vehicle start-up Lucid Motors. The “story” behind Lucid is that it is a strong contender to donate to Tesla running for its money With this interesting EV situation now on the scene, forget about investors bidding on Nio in the hope that it’s the ‘next Tesla’

Instead, investors are bidding on the future title Lucid in the hope that it will be the “next Nio”

That alone doesn’t suit the bear, however, he might limit his ability to continue melting to new heights What could really hurt Nio in the future? Competition is intensifying in its domestic market

Certainly, Nio bears like me will be looking for any indication that all that glitters is not gold with this highly fashionable EV game A year ago, when it seemed on the verge of bankruptcy, the negatives on his outlook thought this old penny stock was going to zero

Instead, he’s competed in his aforementioned 13-time rally However, just because the title has proven his bears wrong so far doesn’t mean he will continue to do so. Aside from the risk that retail investors will leave Nio and embark on the latest EV game in the block, there are factors related to the underlying business of the company that could negatively impact its share price.

That would be the risk of competition Sales of new energy vehicles (electric and hybrid electric) in China are expected to increase by 41% in 2021 But, as competition intensifies, the sharp increase in demand under- underlying growth may not be enough to keep growth as expected

Competition Comes From All Around There are rival China-based EV companies like Xpeng (NYSE: XPEV) and established global EV manufacturers like Tesla And, increasingly, competition from automakers traditional global automobiles such as General Motors (NYSE: GM) and Volkswagen (OTCMKTS: VWAGY)

Year-over-year sales of Nio increased dramatically But sequentially (month-to-month) shipments growth was only 2% Share price remains today ‘hui based on forecasted near 100% revenue growth in the coming year Even if the company grows 50% in the coming year (still impressive figure), stocks could continue to fall as it becomes clear that the stock advances on itself over the past 12 months

At current prices, Nio has a market cap of $ 85 billion As many have noted (including Josh Enomoto of InvestorPlace), that’s above GM’s current valuation. But if the competition is taking over and growth is below expectations, don’t expect it to last

Add to that the waning interest of trend-following investors, and there is more to it to sink Nio stock rather than skyrocket in the short term

As of the publication date, Thomas Niel does not hold (neither directly nor indirectly) any position in the securities mentioned in this article

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Global news – United States – Losing speed, Nio stock could continue to slide