NIO Stock News and Forecast: Why did NIO stock fall on Wednesday and where to next

• NIO shares collapse on Wednesday as the meme stock space hits a wall of selling.
• Electric vehicle maker stock drops nearly 9% on the day to close at $46.04.
• The Chinese EV had earlier stopped at $54.86 resistance.

NIO shares ran into a wall of selling yesterday as the meme stock massacre caught fire with nearly all our favourite retail names suffering serious losses. NIO was badly hit with a loss of nearly 9%. The shares suffered from a general sell-off in the meme stock universe and also as the Chinese stock NIO got extra negative read-across from the DIDI situation (see more) also hit home. We had cautioned against fresh longs on Wednesday in our article "Three reasons why a pullback to $42 in NIO is likely" as the stock had been overbought last week on the Relative Strength Index (RSI) and had slammed into resistance at $54.86.  

NIO statistics

Why did NIO stock fall yesterday?

Wednesday saw a lot of nervousness hit the market with Chinese names in particular hit by the DIDI saga as mentioned. Added to this have been growing concerns over the new delta variant of covid and some stretched equity valuations. NIO had been steadily appreciating since dropping to nearly $30 in May. Since then, the shares gradually appreciated in line with most sector peers as Tesla in particular put in a solid June. NIO shares are up over 23% in the last month, so the setback has to be taken into context.

Recent delivery numbers from all Chinese electric vehicle manufacturers were strong. LiAuto (LI) posted record June deliveries, up 166% YoY, XPeng (XPEV) posted a 439% yearly gain in deliveries, while NIO itself posted a yearly gain of nearly 116%. BYD (BYDDF), the Warren Buffet-backed Chinese electric vehicle maker, saw its June sales rise 102% YoY. Tesla (TSLA) also produced record deliveries of over 200,000 vehicles for the first quarter of 2021. So, all the electric vehicle manufacturers seem to be hitting record numbers despite global semiconductor chip issues. 

NIO stock forecast

NIO shares just touched off our $54.86 resistance on Thursday before retracing back slightly to close just on the short-term 9-day moving average on Friday ahead of the long weekend. Technically, the stock was under pressure and then the DIDI news added to the headwinds. The move up from the lowe $40's has been fast with a relative lack of volume.

The problem with such as rapid ascent is it paves the way for a rapid fall if sentiment turns. Volume is a cushion and lack of it saw NIO fall sharply. A small support zone is located at $46 from the 21-day moving average but the strong zone is $42, where the 200-day moving average sits and also the volume profile looks much stronger.