Nio Stock Forecast: Chinese services data leads NIO lower

NIO loses ground Tuesday on weak Chinese services data.
NASDAQ Composite caves 0.5% at start of week.
Hang Seng falls more than 2% on Tuesday.
Services PMIs in UK, Germany and China lead to risk-off mode.
Nio deliveries in Q3 look quite promising so far.

Nio (NIO), the Chinese electric vehicle (EV) automaker, has seen its share price slide on Tuesday due to weak services data out of the mainland. Nio stock is down 1.3% to $10.86 at the time of writing on Tuesday morning – the first day of the trading week due to Monday’s Labor Day holiday.

Poor service sector data in the UK, Germany and China seems to have confirmed that the global economy is losing a skip in its step, and this has led to a risk-off approach in the market on Tuesday. US Treasuries have seen their yields rise on the longer maturities, but the 3-month to 2-year segment bears a falling yield.

The NASDAQ Composite lost 0.5% at the start of Tuesday’s session, with the S&P 500 and Dow Jones indices losing slightly less.

Nio stock earnings news: Caixin worries the world

China’s Caixin Services Purchasing Managers Index (PMI) for August declined from 54.1 in July to 51.8. This reading still shows an expanding services sector, albeit in a much-diminished state.

Combined with the UK and Germany both providing Services PMIs on Tuesday morning that demonstrated a contraction in their respective economies, the Caixin reading gave the market a pessimistic view of the global situation. While Goldman Sachs now gives the US economy just a 15% chance of falling back into recession – in other words, a much better chance of sticking to the vaunted “soft landing” circumstance – weakness in other developed economies could easily spill over into the US economy.

Hong Kong’s Hang Seng Index closed down 2.06% on Tuesday.

Nio is coming off an impressive performance on Friday as vehicle deliveries in August soared, partially making up for the negativity surrounding last week’s Q2 earnings results. Lower delivery volumes and management’s price cuts during the second quarter led to a 25% dropoff in vehicle revenue.

Nio then returned on Friday with 19,329 in deliveries, a major uptick in demand from the second quarter. What’s more, management is guiding for deliveries between 55,000 and 57,000 in Q3. That target should be fairly easy to achieve since July saw 20,462 deliveries.

Nio now just needs to deliver between 15,209 and 17,209 in September to reach that milestone. This would amount to approximately a 150% increase in deliveries from the second quarter.

CEO and Chairman William Bin Li even boasted last week that Nio’s current delivery trajectory has “propelled Nio to the top position in China's premium electric vehicle market for vehicles priced above RMB300,000.”

NIO FAQs

What is Nio?

Nio is a designer and manufacturer of electric vehicles based in Shanghai, China. Formerly known as NextEV, the company changed its name to Nio in 2017. Nio trades under the NIO symbol on the New York Stock Exchange (NYSE) and under the 9866 tag on the Hong Kong Stock Exchange. The company was incorporated in 2014 but went public on the NYSE in September 2020 with a $1.8 billion initial public offering. William (Bin) Li is the CEO of Nio, which he co-founded with President Lihong Qin, another Chinese business executive.

How is Nio different from other EV manufacturers?

The main difference with other major EV brands like Tesla is that Nio offers battery swapping technology in addition to normal charging options. These swap stations allow drivers to switch out their batteries for fully-charged, identical batteries in less than five minutes, which allows owners to drive long distances without needing to stop for an hour to recharge like most other EVs. At the end of 2022, Nio had 1,305 battery swap locations and built its first swap station in Norway in May 2022. The goal for the customer is to reduce range anxiety.

What vehicles does Nio offer?

Nio began its reign with the EP9 sport car back in 2016, and the vehicle is still being produced on a small scale. Since then, Nio has branched off into more mainstream fare. The ES8 was introduced in 2018. It is a full-size SUV with a range of 311 miles. The ES6 SUV dropped the following year and has a range of 379 miles. The smaller EC6 SUV arrived in 2020, and the ET5 and ET7 sedans were released in 2021 – the latter two with versions capable of achieving 621 miles of range. The ES7 and EC7 arrived in 2022 and 2023, respectively.

Are Nio vehicles sold outside China?

Yes. While the vast majority of Chinese automakers focus wholly on the Chinese market, Nio began its foray into Europe in late 2021. After beginning in Norway, Nio began entering the German, Danish, Dutch and Swedish markets in 2022 with plans to expand throughout the rest of the decade. Although they are not yet sold in the US, Nio vehicles are being tested in California under that state’s autonomous driving program.

Nio stock forecast

Nio’s stock remains tethered to the $10.15 to $11.30 resistance zone. Outside of last week’s poor Q2 earnings results, in which NIO dropped to support at $9.50, buyers have been quick to pick up shares at the lower end of this range.

A break of that $11.30 range, which is quite likely as the calendar nears the October 1 date of Nio’s monthly delivery announcement, will give bulls reason to push the share price up to the $13 to $14 resistance range that was respected on a number of occasions last year. From there, breaking above $16 is the main level to watch. Bulls were immediately knocked down when they tested the level on August 4.

NIO daily chart

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