TLDR
- NIO stock jumped 5.99% in Hong Kong and 4.34% in U.S. markets, breaking key resistance levels
- J.P. Morgan maintained Overweight rating with $8 price target after $1 billion equity offering
- Capital raise will issue 181.8 million shares at $5.57, creating 8-9% dilution for shareholders
- Company expected to reach positive free cash flow by Q4 2025 with improving profit margins
- Key catalysts include NIO Day September 20 and Guangzhou Auto Show in November
NIO stock posted its strongest performance in weeks, surging across both major trading venues. Hong Kong investors pushed shares up 5.99% to HK$51.00 while U.S. traders added 4.34% to $6.49.
The rally comes despite dilution concerns from the company’s recent capital raise announcement. NIO revealed plans to issue 181.8 million Class A ordinary shares at $5.57 each, raising $1 billion in fresh capital.
The offering price represents a 2.6% discount to September 10’s closing price. Once completed, existing shareholders will face 8-9% equity dilution from the new share issuance.
Trading volumes supported the upward move. Hong Kong markets saw HK$252.66 million in volume with a 1.02 volume ratio, indicating strong institutional participation in the rally.
Technical Breakout Gains Momentum
The technical picture is turning increasingly bullish for NIO shares. In U.S. markets, the stock finally broke above stubborn resistance levels that had capped gains for weeks.
Key moving averages clustered around $6.40-$6.48 are now providing support for further upside moves. The RSI reached 60.7, leaving room for additional gains before overbought conditions emerge.
Hong Kong shares bounced convincingly from recent lows near HK$48.12. The recovery from these levels is giving bulls fresh reasons to stay optimistic about the stock’s direction.
Analyst Maintains Bullish Outlook
J.P. Morgan analyst Nick Lai maintained his Overweight rating and $8 price target despite the equity offering. The analyst believes the fundraising serves a valuable purpose in China’s competitive EV landscape.
“Fund raising should help the company in an extremely competitive EV market in China,” Lai explained. He acknowledged the timing was somewhat surprising given management’s recent Q2 results presentation.
NIO held RMB 27 billion in cash and equivalents by June’s end. Lai estimates the company’s cash burn narrowed to approximately RMB 2 billion in Q2 2025.
The analyst expects NIO to achieve positive free cash flow by Q4 2025. Management has targeted Q4 non-GAAP operating profit breakeven, driven by volume growth and improving margins.
Street forecasts have improved from a RMB 1.9 billion Q4 loss estimate to roughly RMB 1.1 billion. J.P. Morgan’s own Q4 loss estimate sits at RMB 500 million.
Upcoming Catalysts Drive Interest
NIO Day on September 20 will reveal final pricing for the ES8 premium SUV. The event comes after strong pre-order response for the new model.
The Guangzhou Auto Show in November presents another potential catalyst. NIO may unveil the Onvo L80, a five-seater SUV positioned as a high-volume model.
Lai projects 488,000 unit sales in FY26, up from 323,000 this year. The company plans to use offering proceeds for R&D of core smart EV technologies and battery swapping network expansion.
The Street consensus remains Moderate Buy with 6 Buy ratings, 5 Holds, and 1 Sell. The $6.16 average price target suggests shares are fairly valued at current levels.
