U Power Plunges 24.8%—What’s Fueling the Market’s Skepticism?

Summary
• U Power’s stock nosedived 24.8% intraday, hitting a 52-week low of $1.865
• Company announced a $1.4M registered direct offering and expanded battery-swapping stations in Thailand
• Dynamic PE ratio at -1.45, RSI at 22.36 (oversold), and MACD at -0.278 (bearish)

U Power’s dramatic selloff has sent shockwaves through the EV sector, with the stock collapsing from $2.54 to $1.91 in a single session. The plunge defies immediate logic, given the company’s recent expansion into Thailand and partnerships with energy giants. Traders are scrambling to decipher whether this is a short-term correction or a structural bearish shift in investor sentiment.

Blockchain Ambitions vs. Execution Risks Clash
U Power’s 22.44% intraday drop has left investors grappling with conflicting signals. While the company’s blockchain-driven battery-token model and international expansion into Thailand and Portugal represent strategic leaps, the stock’s collapse to its 52-week low suggests skepticism about execution risks and valuation. The dynamic PE ratio of -1.45 (negative due to losses) and 5.9% turnover rate highlight weak fundamentals. Despite the 50 battery-swapping station agreement with Shandong Hi-Speed and BOCOM, traders are prioritizing caution over speculative optimism, fearing the company’s aggressive expansion may outpace its financial resilience.

EV Sector Mixed as Tesla Leads Downward Drift
The EV sector remains under pressure, with Tesla’s -3.93% intraday decline amplifying U Power’s struggles. Ford’s looming low-cost EV platform announcement and Mercedes-Benz’s price cuts for EQ models underscore pricing pressures. U Power’s sharp drop contrasts with peers like Rivian and NIO, which have shown more stable fundamentals, but aligns with the sector’s broader bearish trend. The market’s bearish sentiment reflects concerns over margin compression and oversupply, particularly as subsidies wane and competition intensifies.

ETF Positioning and Technical Divergence Signal Cautious Bets
• 200-day MA: $4.54 (well above current price)
• RSI: 22.36 (oversold)
• MACD: -0.278 (bearish)
• Bollinger Bands: Price at $1.91 near lower band ($2.34)
• Support/Resistance: 200D support at $2.55–2.68, 30D support at $3.76–3.80

U Power’s technical profile suggests a bear trap scenario, with the RSI hitting oversold territory (22.36) typically signaling potential rebounds. However, the bearish MACD (-0.278) and 52-week low trading indicate a deeper structural bear trend. Traders should focus on Invesco EV ETF (IVOT) for sector exposure. Aggressive short-termers might consider a bullish calendar spread if the stock breaks above $2.68, but the sector’s weakness and lack of leveraged ETFs complicate bullish plays.

Backtest U Power Stock Performance
The backtest of UCAR's performance after an intraday plunge of at least -25% shows mixed results. While the 3-day win rate is 45.70%, indicating a higher probability of a positive return in the short term, the 10-day win rate is lower at 41.39%, and the 30-day win rate is 46.36%, suggesting that longer-term returns are also mixed.

U Power at Crossroads—Watch for Breakouts or Breakdowns
U Power’s plunge to its 52-week low underscores a critical juncture for the stock. While the RSI’s oversold reading hints at a potential rebound, the bearish MACD and broader sector weakness suggest further downside is likely unless the stock breaks above $2.68. Tesla’s -3.93% decline as a sector leader amplifies the risk of continued underperformance. Investors should monitor the 200-day MA ($4.54) as a long-term benchmark and watch for follow-through volume above $2.68 to signal a reversal. For now, the bears hold the upper hand—brace for volatility as the EV sector recalibrates.