NIO slumps roughly 9%, as bears target 2022 lows of $18.47

Update: NIO stock price extended its three-day downtrend on Thursday, accelerating its sell-off towards the 2022 lows of $18.47. In a rough day for Wall Street indices, NIO shares tumbled 8.68% to end at $19.88. Amid the ongoing Russia-Ukraine war, the pain in NIO stock was exacerbated by the supply chain problems at Ford and Rivian Automotive. Ford CFO John Lawler said earlier this week that his company is facing supply chain challenges in acquiring the raw materials it needs, and that "geopolitical issues are exacerbating" the problem. Further, Fed Chair Jerome Powell’s commitment to delivering a 25bps rate hike in March also weighed on the investors’ sentiment.

Nio (NIO) stock had another red day on Wednesday with the stock closing just under half a percent lower at $21.77. Equities rallied on Wednesday broadly with all three main US indices closing higher. Falling yields and some clarity from Fed Chair Powell helped to at least define some elements of risk for investors. EV stocks could have expected some form of bounce given that they have been one of the worst-performing sectors this year. However, high growth names remain out of favour and some sector specific news did not help.

Rivian Automotive (RIVN) Stock News and Forecast: Is there more downside to come?

Nio Stock News

The sector has come under attack this week from its two main protagonists, Rivian (RIVN) and Lucid (LCID). Lucid started the bearish trend earlier in the week when it reported earnings that missed on revenue numbers and saw Lucid slash its delivery guidance for 2022. This put the high-growth EV names in the crosshairs of sellers. Rivian then added to this negative sentiment yesterday when it announced price hikes for some of its models, and Tesla CEO Elon Musk took a Twitter swipe at the upstart Tesla competitor. Musk said Rivian's negative gross margin will be staggering. Rivian shares immediately tanked on opening, and this continued for most of the session. Electrek then reported that Rivian customers were canceling at high rates due to the price increases.

Shares in Rivian closed down over 13% on Wednesday, while by comparison Tesla (TSLA) closed up 1.8%. Rivian, Lucid, Nio and other Chinese EV makers are viewed as much higher risk investments than Tesla. It is the Rivian news that tends to have more impact on Nio rather than what Tesla does. We also still have the legacy effects from Chinese regulatory concerns meaning Nio stock always struggles for consistent momentum.

Nio Stock Forecast

Nio stock remains bearish. The Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) confirm the price direction and sentiment is terrible. For now, $19.31 remains the key support with only a break of $27.34 turning Nio stock bullish. NIO is below all main moving averages. A break of $19 will likely see a quick sharp move to $15 due to the note volume gap. 

NIO stock chart, daily

Previous update:

Mid-session Update: Following a soft start to the day, NIO stock plummeted and now trades 7.02% lower at $20.25 per share, despite Wall Street opening with a strong note. Major indexes held on to pre-opening gains, with the S&P500 and the NYSE Composite up almost 2% in the first minutes of trading, although the market’s sentiment quickly took a turn to the worst amid undergoing war in Eastern Europe.

Peace talks are underway in Belarus, but speculative interest does not believe it would come to good port after Russian President Vladimir Putin, told his French counterpart Emmanuel Macron that the goals of Russia's operation in Ukraine would be achieved in any case. Meanwhile, US Federal Reserve chief Jerome Powell is testifying for a second consecutive day before Congress, noting that “it will be appropriate to continue to proceed with rate hikes through the course of the year,” in line with his Wednesday’s hawkish stance. 

Update: Nio stock is down more than 7.7% to $20.10 about one hour into Thursday's session. The stock opened 0.55% lower at $21.73 but subsequently sold off heavily. Chinese competitors Xpeng (XPEV) and Li Auto (LI) are also trading much lower, down 8% and 4.7%, respectively. Growth is having another off day. The Nasdaq is down 0.6%, but the S&P 500 and the Dow are both up slightly. Other EV names are also lower, with Tesla (TSLA) down 1.6%, Lucid (LCID) down 7.8% and Rivian (RIVN) down 5% on Thursday. Electrek has just reported that Rivian has decided against raising prices on its models despite inflation, a strategy that will mean heavier losses in the short term for the EV pickup truck upstart. Rivian had announced raising prices only just one day ago. Tesla CEO Elon Musk's ribbing of them on Twitter must have had the intended effect.

Nio stock opened lower on Thursday as equity markets failed to follow on from Wednesday's strong gains. Nio did not participate in those gains yesterday and looks set for more losses on Thursday. The stock opens 0.55% lower at $21.73. Other EV names are also lower with Lucid (LCID) down but Rivian (RIVN) is up slightly at $53.71 on Thursday. Tesla (TSLA) the sector leader has just gone positive for the session. Just seeing as I type this that Electrek has just stated that Rivian (RIVN) is to backtrack on its price hikes which hit the stock yesterday. After backlash, Rivian backtracks on price hike, letter from Founder/CEO RJ - Electrek. This will be key to watch for the sector. Rivian shares have just pushed on strongly and are now up 2% from just 5 minutes earlier. NIO continues lower and is down 1.46% at the time of writing.

The author is long NIO.