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Why Is Nio Stock Down 11% Today?


  • Investors are scratching their heads as Nio (NIO) stock experiences an incredible 11% decline today.
  • China-specific headwinds are materializing, but they may not account for all of the drop.
  • Anxiety around upcoming earnings from Tesla (TSLA) could also be driving today’s move.
Nio Berlin 2022, NIO stock
Source: THINK A / Shutterstock.com

Among the biggest losers in another down day in the markets is Chinese electric vehicle (EV) maker Nio (NYSE:NIO). Down more than 11% at the time of writing, NIO stock is continuing to slide as investors price in what could be a more bearish macro backdrop than previously thought.

As InvestorPlace contributor William White pointed out earlier today, Chinese stocks as a whole are getting beaten down in a big way. Much of this has to do with expectations for more lockdowns and slower domestic growth in China. That’s because, following the Chinese Communist Party Congress, it appears that any shift away from the country’s zero-Covid-19 policy may be further away than some would have hoped.

Additionally, some pointed commentary from President Xi Jinping aimed at Taiwan has investors concerned about the potential for more geopolitical turmoil. Russia’s invasion of Ukraine has already hit markets hard, as supply chains have further tightened. Any additional tensions could send this globalized world into a deeper tailspin.

Lastly, there are some EV-related factors that investors seem to be pricing into NIO stock today. Let’s dive into what’s moving this big player in the EV segment right now.

Why Is NIO Stock Sinking Today?

Indeed, the macro backdrop for Nio isn’t great right now. However, there are some additional concerns that appear to be driving significant underperformance in this high-growth EV stock.

Interestingly, it appears much of the anxiety around NIO stock comes from upcoming earnings for Tesla (NASDAQ:TSLA), which are expected after market close today. Analysts expect to see slowing growth, driven by aforementioned macro concerns out of China. In many ways, if China slows, so too will Tesla. The company produces a significant percentage of its overall fleet in Shanghai.

Accordingly, how Tesla trades is likely how Nio will trade until the company reports its own earnings on Nov. 8. Currently, TSLA stock is trading in a relatively tight band, as investors appear to have priced in concerns heading into the report. That said, it seems like many investors don’t want to wait and see how (potentially) bad Nio’s results will be. Some investors clearly see NIO stock as a higher-beta bet on the overall sector right now.

On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

Article printed from InvestorPlace Media, https://investorplace.com/2022/10/why-is-nio-stock-down-11-today/.

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