NIO Stock Fell 6.9% This Week: Why It Happened

NIO Stock Fell 6.9% This Week: Why It Happened

The stock price of NIO Inc (NYSE: NIO) fell 6.9% this past week. This is why it happened.

The stock price of China-based electric vehicle company NIO Inc (NYSE: NIO) fell 6.9% this past week, going from a previous close of $45.97 on July 12 morning to $42.80 in the previous closing day. This is a continuation of downward momentum as the company stock price is down 19.5% since June 30.

One of the biggest catalysts for the stock price drop this week has to do with the Chinese government investing local ride-hailing company DiDi Global. Last week, the Chinese government deployed a cybersecurity review of DiDi Global — which recently went public on the NYSE in late June. This was part of a broader initiative by the Chinese government to investigate many local companies that are trading in the U.S. markets due to concerns that audits could compromise the personal information of consumers.

The Chinese government had DiDi’s app removed from app stores. And the Cyberspace Administration of China (CAC) alleged that DiDI illegally collected data from users. Along with the CAC, the antitrust regulator State Administration for Market Regulation (SAMR) also visited Didi to review its network security.

Even though NIO itself was not listed as one of the companies that will be investigated, there was still a backlash from investors who are concerned about Chinese tech companies. A number of China-based companies saw a selloff as a result this past week. For example, Cathie Wood’s Ark Invest sold 3 million shares of HUYA, 1 million shares of Tencent, and over 600,000 shares of JD.com, according to Markets Insider.

One of the analysts who is bullish on NIO is HSBC’s Yuqian Ding. Ding had upgraded NIO shares from a “Hold” rating to “Buy.” And Ding assigned NIO a price target of $69.

Ding had issued this rating and price target on NIO following the company’s Power Day in Shanghai.

At the event, NIO it is planning to have over 4,000 NIO battery swap stations worldwide with around 1,000 outside of China by the end of 2025. And to share NIO’s achievements with the automotive industry and smart electric vehicle users, NIO announced that NIO Power’s charging and swapping system, as well as its BaaS (Battery-as-a-Service), will be fully available to the industry.

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.

NIO Stock Forecast and Quote: DIDI and Delta trigger extended slump

NIO shares fell sharply after the DIDI saga hurt Chinese stocks.

NIO has retraced to test the 200-day moving average.

Electric vehicle stocks are struggling for momentum.

Update July 19: Can Nio find a new gear and shift upward? Not so fast, it seems that shares of the Chinese electric vehicle maker are still stuck in reverse. NYSE: NIO is trading some 4.4% down on the day, at around $41.36 at the time of writing. That completes a double-digit drop of some 12% in the past month. Apart from the broad market drop related to the Delta covid variant, the stock is on the back foot due to DIDI saga, which has put Chinese stocks listed on Wall Street at the scrutiny of regulators on both sides of the Pacific.

NIO stock suffered a backlash from the DIDI fallout and has retraced to the 200-day moving average. NIO has thankfully found some support here, but the broader market is beginning to look more negative and this is providing a fresh headwind for NIO. The resistance at $54.86 worked perfectly and with the benefit of hindsight has set up the current bearish situation. The short-term 9 and 21-day moving averages have also been broken, and now the 200-day is the next big level.

Recent delivery numbers from all Chinese electric vehicle manufacturers were strong. LiAuto (LI) posted record June deliveries, up 166% YoY. XPeng (XPEV) posted a 439% yearly gain in deliveries, while NIO itself posted a yearly gain of nearly 116%. This had set the sector up for a strong early July, but NIO ran into strong resistance at $54.86.

NIO statistics

Market Cap $79 billion Price/Earnings -83 last 12 months Price/Sales 25 Price/Book 19 Enterprise Value $56 billion Gross Margin 16% Net Margin Average Wall Street Rating and Price Target Buy $54.89

NIO stock forecast

The recent downtrend has been confirmed by the parallel correction in all major indicators. Releative Strength Index (RSI), Commodity Strength Index (CCI) and Moving Average Convergence Divergence (MACD) are all trending lower in line with the price. The sector remains weak on Monday with Tesla (TSLA) down 2% in the premarket, and where Tesla goes all electric vehicle stocks tend to follow.

A break of the 200-day moving average is a strongly negative signal, and NIO will then have a last chance at the 100-day moving average, currently at $41.24. This is the last area of strong volume on the profile chart, with strong volume until $37. Once $37 is broken the volume dimishes and the next support zone to wait for is the May low near $30.

Why NIO Stock Is Down Today

What happened

Shares of Chinese electric-vehicle maker NIO (NYSE:NIO) were trading lower on Wednesday. Although investors' concerns about U.S.-listed Chinese stocks have lingered since the Chinese government took action against DiDi Global (NYSE:DIDI) and other recently listed stocks last week, there was no immediately obvious trigger for Wednesday’s decline.

As of 2 p.m. EDT, NIO’s New York-traded shares were down about 4.6% from Tuesday’s closing price.

So what

China’s government said last week that it has launched cybersecurity reviews on DiDi and other app-centered Chinese companies that have listed on U.S. stock exchanges this year, including Kanzhun and Full Truck Alliance. Regulators appear to be concerned that the audits and oversight required of U.S.-listed companies could somehow compromise the security of Chinese consumers' personal information.

But it’s not clear that those concerns should (or will) extend to NIO. While the company does provide an app for its customers, it’s mostly a carmaker – and its shares have been listed on the New York Stock Exchange since 2018.

Is that why NIO’s shares are down today? It seems likely: NIO itself had no news (positive, negative, or otherwise) to share on Wednesday, and only minor news (a new director was appointed) earlier in the week.

Now what

If there is a concern raised by the DiDi situation, it’s that future Chinese government actions could limit NIO’s ability to raise cash from U.S. investors. That wouldn’t be ideal, but the company has other avenues to raise cash, including a (likely) future listing on Hong Kong’s exchange.

In the meantime, NIO has plenty of cash on hand, a strong order book, and two new models coming next year. For now at least, I don’t think the action against DiDi is enough of a reason for auto investors to sell NIO.