NIO Trade on Aug 31, 2020 10:25 from Cklamb: Tradervue User Stock Trades.

NIO
Intraday Fundamentals
• Dilution event
o NIO is capitalizing on investors' insatiable demand for EV-related stocks.
o The Chinese electric vehicle maker announced Thursday it planned to sell 75 million ADRs, short for American depositary receipts, to raise money, in part, to fund development of its autonomous driving technologies as well as expand globally.
o (ADRs are, essentially, stock in foreign companies that trade in the U.S.)
o Monday, the company followed up the Thursday announcement it is selling 88.5 million ADRs at $17 a share, an 8% discount to where they closed Friday.
o The 8% discount might look a little large to seasoned traders, but NIO (ticker: NIO) shares have been on fire lately, rising 55% in August, as of Friday's closing price. The average price for NIO stock over the past 20 trading days is less than $15 a share.
o NIO stock is off almost 6% in premarket trading to about $17.40 a share. Dow Jones Industrial Average futures, for comparison, are up 0.2%. S&P 500 futures have risen 0.3%.
o The sale will bring in about $1.5 billion into NIO coffers. The amount rises to about $1.7 billion if underwriters exercise all their options. NIO, for reference, has about $1.9 billion of debt on its book. NIO's market capitalization was about $25 billion as of Friday's closing price.
o Many EV makers have been using strong market conditions to raise money. EV stocks Barron's tracks are up about 300% year to date. Stock in Tesla (TSLA), the EV behemoth, is up about 430% year to date, making it the most valuable car company on the planet.
o Li Auto (LI) and Xpeng (XPEV) recently raised billion in initial public offerings and other EV companies are merging with special purpose acquisition companies, or SPACs,
o The question for investors is the capital raising a sign of a market top or does it represent an opportunity for EV makers to extend their lead over the traditional industry in battery and autonomous driving technologies.
o The bulls will believe the latter. The bears will believe the former.
o There are still plenty of EV-skeptics out there. More than one-third of analysts covering Tesla shares rate them Sell. The average Sell-rating ratio for stocks in the Dow is about 8%. About 13% of analysts covering NIO stock rate its shares Sell. About 47% rate shares Buy. The average Buy-rating ratio for stocks in the Dow is about 55%. The Buy-rating ratio for Tesla stock is only 16%.
o There are more Sell ratings, and fewer Buy ratings, for EV stocks. Analysts are having trouble keeping up with share price gains and predicting what those gains mean for EV penetration into the traditional auto market in years to come.
Technicals
ADV 133m RVOL 1.16 ATR 1.29 Short 14.4% Inst Own 45.7%
Daily Chart

Hourly Chart

Intra Chart

Trading Strategy
• If this sells off into the open breaks the PM low, set up to limit in on a VWAP resistance play risking 17.65 hold for the one to one under the PM break. Hold a little with market structure stops looking for 16.50
• If this sells off most of the morning this may set up for a long at 15.50, with 16.50 being the recent break out point a run this deep is unlikely
• Long 16.50 if it holds after a deep sell off earlier in the morning
Reading the Tape
There was a solid stall on the tape around 10 EST when this broke the PD low and stopped moving higher at 18.40 allowing for the short as soon as it had given up 18.36
Trade Management

Trade Notes
I was watching this for a gap close short of the LoD the day from the day prior. this stay strong on the tape making the wait a little easier to handle. When this started holding the PD low. I looked for other points from Friday that this may slow down or reverse. I picked 18.36, 18.66 and 18.81 as the most likely areas that this would. It broke the .36 ad stopped at .40. I held in there and noticed that this was not printing .39/ I considered putting in a sell stop at .35 But, I held as this stayed in a 4 cent range for the better part of three minutes. I marketed in as it gave up .35 filling at .32 stopping at the HoD with about 8 cents of risk. It bounced off 18.10 and I decided not to try to hold it to 18.