Nio stock posts a modest bounce as equities advance on relief

UPDATE: With US Federal Reserve chief Jerome Powell's testimony underway, stocks trade with a better tone. His generally hawkish perspective brought relief to financial markets, as he anticipated a 25 bps rate hike this month, below the 50 bps expected by several analysts. Additionally, the Russian negotiator said that a ceasefire would be discussed at talks with the Ukrainian delegation, about to start shortly. NIO shares remain in the red, but off intraday lows. It is currently trading at around $20.94 per share, down 4.25%. US indexes, however, are in franc recovery with the Dow Jones Industrial Average up over 550 points, being the best performer, while the Nasdaq Composite is a laggard, still up 1.02%. Meanwhile, and as the focus returned to inflationary pressures, government bond yields head firmly higher, with that on the US 10-year Treasury note currently at 1.84%.

Previous update: Nio stock sold off right from the start on Wednesday. At 10:45 AM, New York time, the EV stock has shed 5% and is trading at $20.76. This puts it back to September 2020 levels. This is all the more surprising as the Nasdaq has risen 0.4% at the same time. Competitors are also down. Lucid Group (LCID) is down 5.4%, Tesla (TSLA) is down 1.6% and Rivian (RIVN) is down a whopping 12%. The big problem seems to be that Rivian has announced it will increase the price of its already expensive premium offerings by 20%. Investors appear to think that these price increases are likely to translate to other EV stocks. Inflation also appears to be an ongoing problem that may not abate anytime soon. This is bad for the EV sector since high oil prices have been making the industry more attractive of late in comparison.

Nio stock (NIO) traded lower on Tuesday as the market digested further news over the Russia-Ukraine conflict and decided risk aversion was the safest bet for now. This naturally then led to risk assets falling with most equity indices finishing sharply lower. Nio and other EV stocks are seen as high-risk stocks within the high-risk equities space, so any gains are going to be very hard to sustain in the current environment. 

Read how Apple shares are trending with Ukraine conflict.

Nio Stock News

On Tuesday we got the latest delivery data from Nio. February was always likely to be a slow month as it comes with the Chinese Lunar New Year meaning it is a three-week month, so comparisons are not exactly fair on a month-on-month basis. Consequently, Nio deliveries for February fell to 6,131 vehicles versus 9,652 vehicles delivered in January. This is a 36% decline monthly, but compared to February of last year it represents an increase of just under 10%.

So far in 2022 Nio has delivered 15,783 vehicles, a figure that is up 23.3% YoY. Nio also announced it has received approval to list on the Hong Kong Stock Exchange. These delivery numbers were solid if unspectacular and so did not give Nio stock any great catalyst on Tuesday. Nio shares closed down 4% on Tuesday as many electric vehicle stocks suffered. The main reason for this sector-wide decline was the strong performance on Monday with many EV stocks up close to 10%. Lucid (LCID) then released earnings after the close on Monday, which shot the sector to pieces. Not only did Lucid miss on top and bottom lines, but it slashed its delivery forecasts for 2022 already only two months into the year. This led to sharp declines for all EV stocks on Tuesday. 

Nio Stock Forecast

The trend is unfortunately not our friend here. At least that is the case for those of you who are long, of which your author is one. Chinese tech stocks have not been the place to be over the last six months, and now with the geopolitical situation worsening it is unlikely to see a turnaround anytime soon. Nio remains bearish so long as it remains below the key medium-term resistance at $27.34. We have a trigger at $26.41, which is the high from two weeks ago. Support at $19.31 is key to hold.

Nio stock chart, daily

Breaking $19.31 brings Nio into a volume gap, so a quick move to $16 is then likely as we can see on the weekly chart below.

Nio chart, weekly

Update: Nio stock opened in a moderately positive way on Wednesday as global markets await the next development in the Russia-Ukraine conflict. Talks between the two are scheduled to take place today but hopes are not high for any resolution. Nio will find it tough to make any significant gains in such a strong negative macro and geopolitical environment. The stock was slated to open up just over 1% on Wednesday, having closed Tuesday at $21.87, but already ten minutes into the regular session it has gone negative. Earlier EV peer Rivian (RIVN) announced it was hiking some prices. Elon Musk, Tesla's CEO tweeted that Rivian's negative gross margin will be staggering. Rivian (RIVN) stock is collapsing and is down over 8% on Wednesday. Nio had earlier reported delivery numbers for February. At the time of writing, Nio stock is trading at $21.82 down 0.23%.