NIO stock in the red as Chinese equities fall on Goldman Sachs negative outlook
- Goldman Sachs has cut its outlook for 2023 Chinese GDP growth to 5.4%.
- Nio cut model prices by $4,200 earlier in June.
- May deliveries from the electric-vehicle company dropped 12% YoY.
- NIO stock drops 3% in Tuesday premarket.
Nio (NIO) stock is on the backfoot on Tuesday after Goldman Sachs released an update to its economic outlook for China on Monday that forecasts 5.4% growth in 2023. Goldman’s prior forecast had predicted 6% growth.
This news sent most Chinese American Depository Shares (ADRs) lower early Tuesday, including Nio. The stock is down 2% at $9.25 in Tuesday’s first hour of trading, while the broader market also looks pessimistic. NASDAQ 100, S&P 500 and Dow futures are all dropping around 1% at the time of writing.
Nio stock news: Chinese economy upsets again
A narrative has begun to set in across Wall Street. It follows a generally pessimistic approach to Chinese equities. If it’s not related to the Chinese government’s crackdown on tech companies, then pundits point out that Chinese growth is faltering in the post-pandemic world. If it’s not related to the US belief that China is imminently prepared to invade Taiwan – and thus experience repercussions from US or EU sanctions – then they say that China’s unwillingness to allow US regulators to view audits from ADR-linked companies makes them uninvestable. They just can’t seem to win.
Goldman’s new downgrade of Chinese economic growth signals yet another fault line in the deteriorating relationship between US investors and the once beloved Chinese equity market. Chinese youth unemployment rose to a record high last week, and retail sales, industrial growth, and fixed asset investment figures all showed a flagging level of growth over the past month.
In unrelated but important news, Alibaba’s (BABA) long-time CEO on Tuesday left his position. Daniel Zhang will be leaving the company to head up Alibaba’s new cloud computing spinoff. This news was previously reported, but BABA stock still sold off 2% on the news that Joseph Tsai will take over as chairman. The cloud computing segment is viewed as the most profitable part of Alibaba.
Nio delivered 6,155 electric vehicles in May – a 12.4% decrease from the year-ago quarter. In response, management cut prices by an average of $4,200. To make matters worse, Nio’s gross margin in the first quarter dropped to 1%. Just one year ago, this figure was close to 14%.
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 stock broke above its five-month descending trendline last week. Additionally, bulls grew excited when NIO stock conquered the $9.50 resistance level. On Friday, however, this all changed. Nio stock descended below the $9.50 level, and bulls are uncertain whether they can regain some semblance of power.
The 9-day and 21-day moving averages are both merging near $8.25, and that is most likely the best idea for a future support level. Otherwise, NIO could descend to the $7.50 region near for a retouch of the former resistance trendline.
NIO daily chart