NIO Stock Forecast: Despite major Chinese adoption of EVs, Nio stock drops +4%

UPDATE: NIO dropped as low as $12.64, down 4.6%, early Tuesday after announcements of covid lockdowns, US export bans on semiconductor chips to China and further US market deterioration combined to wreak havoc on most Chinese equities. The Nasdaq index is also down 1.2%. The Chinese EV maker opened close to Monday's close but dropped quickly. Nio stock is down 61% year to date and 38% in just the past month. New covid lockdowns in Shanghai and other commercial and industrial centers in China may have a slowing effect on both production and sales. The poor near-term outlook stands in sharp contrast to the overal Chinese market for new energy vehicles. The China Passenger Car Association said today that September saw deliveries of 675,000 new energy vehicles in the world's most populous nation. This figure is up 95% YoY. Nio shares are nearing their 2-year low level of $11.67 from May 12.

Nio (NIO) kicked the week off on the back foot as weakness across the electric vehicle sector and fresh lockdowns in China weighed on the stock. On Monday, shares of Nio sank by a further 3.5% and closed the trading session at a price of $13.28. All three major indices closed in the red yet again as stocks extended their losses from last week. Continued weakness in tech and semiconductor stocks led the Nasdaq to close at its lowest level in two years. Overall, the Dow Jones lost 0.3%, the S&P 500 fell by 0.8%, and the NASDAQ dropped lower by 1% during the session. 

Nio stock price

Following a week of national holidays in China, cases of Covid-19 were once again on the rise, and several cities imposed new lockdowns. Several regions reported thousands of new cases after last week even though domestic travel was down compared to previous years. Shanghai implemented some new lockdowns on entertainment venues like cinemas, and any further lockdowns in the city would certainly have an impact on Nio. 

In addition to weakness across the EV sector, legacy automakers Ford (F) and General Motors (GM) were weighing down the industry. Both stocks were downgraded by an analyst at UBS as they cited a fall in consumer demand as well as the probability of an impending economic recession. The analyst downgraded Ford from Neutral to Sell with a new price target of $10. General Motors was downgraded from Buy to Neutral, although UBS believes GM can potentially weather the storm better than Ford. 

NIO stock performance 10/10/22