NIO Stock Forecast: Nio stock slides 4% amid Fed rate hike concerns

Update, January 26: NIO stock price extended its losing streak into the sixth straight day on Tuesday, shedding another 4.34%. In doing so, shares of the Chinese Electric Vehicle (EV) maker tested 14-month lows once again above $23. Anxious markets ahead of the Fed and big tech firms’ earnings reports dented the sentiment on Wall Street, weighing negatively on NIO. The Fed is likely to hint at a March rate lift-off, with investors worried about its impact on the rate-sensitive tech stocks. Therefore, they are reducing their exposure to high-growth stocks.

NYSE:NIO had its up and down week continue on Friday as the stock traded red and green days over the past few sessions. Shares of Nio plummeted by 6.11% and closed the trading day at $27.35. The ongoing sell-off of high growth names has been relentless and Nio investors have seen the stock price drop by 18.3% since the start of January. More pain for the broader markets came on Friday as the early-year correction continued into earnings season. The S&P 500 and NASDAQ tumbled by 2.72% and 1.89% respectively. The two indices are now 14% and 8% off of their all-time high prices that were set less than two months ago. 

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More bad news for Chinese ADR stocks as AliBaba (NYSE: BABA) subsidiary Ant Group is at the center of a corruption scandal. Shares of ADRs tumbled on Friday following the news as AliBaba fell by 5.95%, JD.com (NASDAQ: JD) lost 4.60%, and PinDuoDuo (NASDAQ: PDD) dropped by 5.61%. Nio’s domestic peers XPeng (NYSE: XPEV) and Li Auto (NASDAQ: LI) both fell by 6.28% and 4.35% respectively, in an all around ugly day for Chinese based stocks on the US markets.

NIO stock price

EV stocks struggled to gain traction on Friday once again. Tesla (NASDAQ: TSLA) plummeted further below the $1,000 price mark and closed the day at $943.90, just days before its earnings call on January 26th. Likewise, Lucid Group (NASDAQ: LCID) and Rivian (NASDAQ:R IVN) both dropped once again, with Rivian hitting a new 52-week low of $60.51 during intraday trading. Ford (NYSE: F) also lost a further 4.62% after a slew of recent analyst downgrades have stopped the red-hot stock in its tracks.

Previous updates

Update: NIO ended another day of trade on the backfoot in what was a general bearish outcome for Wall Street. The stock was down 4.34% on the day, closing at $23.79c after falling with the day's range of between $25.01c and $23.38c. 

Wall Street was in the red by the close following another tumultuous day of trade while traders got set for Wednesday's Federal Reserve updates. The Dow Jones Industrial Average lost 0.19%, the S&P 500 fell 1.22% to 4,356.45 and the Nasdaq Composite dropped 2.28%.

However, it is not just a story isolated to US equities. World stocks are on course for their biggest monthly drop since the COVID-19 pandemic hit markets in March 2020. The MSCI world equity index, which tracks shares in 45 nations, was down another 0.99%. The combination of concerns about potential conflict in eastern Europe, inflation and the higher levels of borrowing rates are impeding global growth prospects and risk appetite at the start of this year.

Nevertheless, the bullish case for Nio remains intact, with three new energy vehicle models expected in 2022. Investors will be looking ahead to the company's s fourth-quarter and full-year 2021 results, likely in the second half of February, for further insight into what's in store from this company.  

With that being said, the break of the 61.8% Fibonacci retracement level near $26.90c and with no-bid in sight to break the fall, the 78.6% Fibo is eyed all the way down at $16.00c. On the other hand, should bulls commit and manage to correct enough of this drop to mark a daily bullish close on the chart, then a 50% mean reversion will take the price into close quarters of the prior support near $27.55. 

Update: NIO shares opened lower again on Tuesday, down 1% at the time of writing, following its 9% plunge on Monday. Continued worries over a possible conflict between the US and Russia in eastern Ukraine and the first day of the Federal Reserve's two-day FOMC meeting have led the NASDAQ Composite down 1.7% at the start of trading. The stock is trading at $24.63 at 9:44 AM EST.

Update: Despite the remarkable turnaround staged by Wall Street indices on Monday, courtesy of bargain hunters, NIO stock price was offered no respite, as it tumbled over 9% to finish at $24.87. NIO shares almost tested the $23 mark before rebounding firmly at the close. In doing so, the price hit the lowest level since October 2020. Shares of Chinese electric-vehicle maker Nio slumped on the back of broad risk-aversion, triggered by heightened geopolitical tensions surrounding Russia and Ukraine. Meanwhile, investors fretted over the Fed rate hike expectations, with the FOMC decision due this Wednesday.

Update: NIO dropped 7% at Monday's open as Friday's reckoning for tech and growth stocks continues unabated. The Federal Reserve's Federal Open Market Committee (FOMC) meeting begins on Tuesday, and most observers expect an interest rate hike to wreak havoc on higher valuation tech stocks such as NIO. The stock is trading at $25.43 at the time of writing. The tech heavy NASDAQ is down 1.7%, but the Dow and S&P 500 are also in the red at the open. It appears the sell-off is continuing.

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