Chinese EV maker Nio (NYSE:NIO) is once again making headlines today. Shares of NIO stock were down as much as 10% in morning trading as momentum appears to be on the downside with this stock.
A lot of investors may be wondering what’s leading to this momentum. I’ll dive into two key reasons why investors appear to be bearish on this name today.
Broad Sentiment for EV Stocks Is Bearish
Across the EV sector today, risk-off sentiment appears to be taking hold.
Indeed, many investors appear to feel now is time to take profits and run. Treasury yields have come down from their 52-week highs last week, but are still at levels that appear to be spooking investors. Additionally, the more important catalyst specific to NIO stock may be the fact that this stock is Chinese.
China-U.S. relations have taken a beating in recent days. U.S. and Chinese senior officials met for the first time last week under President Joe Biden, and conversations were less-than-friendly. Indeed, there’s a lot of baggage here between the two countries. President Donald Trump’s trade war, and Biden’s Buy America stance have made Chinese-U.S. trade headwinds once again the talk of the town among EV investors.
For Chinese EV maker Nio, that’s certainly not bullish for the company’s American expansion plans. Add in broad delisting concerns and things are tense.
Chip Shortage Worries Continuing to Weigh on NIO Stock
Chip shortages have impacted the entire auto sector, with various EV stocks like Nio being the hardest hit right now.
Indeed, auto manufacturers like Nio that are priced as growth stocks are much more likely to be highly sensitive to these sorts of growth-inhibiting drivers. Accordingly, investors seem to be less inclined to jump aboard a growth train that is slowing right now.
Until the chip shortage is sorted out, more selling pressure could be likely in the near term. Right now, it appears a coalescence of near-term factors are at play.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.
