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Nio stock has slumped sharply this year and is now hovering at its lowest level since April last year. This retreat continued as the company published its October vehicle delivery numbers, which showed that its growth was losing momentum. It has now slumped by 54% from its highest point this year.
Nio stock is falling after its vehicle delivery numbers
Nio, a giant Chinese electric vehicle company, is struggling, with its vehicle delivery numbers falling. In a report released on Sunday, the company said that it delivered 34,246 vehicles in October, much lower than what it sold in the same period last year.
Most of Nio’s deliveries were from its main brand, with Onvo and Firefly selling 8,383 and 7,738, respectively.
These numbers came a month after the company published its September and third-quarter deliveries, which showed signs of weakness. Its September deliveries rose by just 7.75, while the third-quarter figure rose by 25.4% to 109,178.
Therefore, there are signs that the company’s business is decelerating at a fast pace as the Chinese EV industry face headwinds. Indeed, data compiled by AlixPartners show that the number of passenger sales in China will slump to 18 million this year, the worst performance since 2014.
Nio’s slowing vehicle sales is happening because of the rising competition in the country, with many companies producing millions of cars a month. The most notable ones are firms like XPeng, Li Auto, Polestar, and BYD.
In a statement last week, BYD said that its revenue rose by 14% last quarter to 221.49 billion yuan. Its net profit jumped to 10.02 billion yuan from 7.82 billion in the same period last year. This growth, however, was lower than expected. It was also driven by its international market, which accounts for 40% of its sales, rather than the domestic market. The rising competition in China has led to a price war that is affecting vehicle margins.
Nio earnings are coming up
The next important catalyst for Nio shares will be its earnings report that comes out later this month. Analysts expect the upcoming results will show that its revenue rose by 52% in the third quarter to 33.16 billion yuan. This growth will be driven by its strong deliveries during the quarter.
Analysts expect that its fourth-quarter revenue will come in at 34.83 billion yuan, largely unchanged from what it made last year.
Therefore, for Nio’s business to continue thriving, it will likely need to open plants in other countries, such as in Europe. BYD is about to launch its plant in Hungary, which will supply its vehicles to its European customers.
Nio stock technical analysis
Nio stock chart | Source: TradingView
Technicals suggest that Nio shares have more downside to go. It has been in a strong sell-off in the past few months and has remained below all moving averages. The stock has also remained below the Supertrend indicator.
At the same time, the Relative Strength Index (RSI) has continued falling and currently stands at 34.60. Therefore, the stock will likely continue falling, potentially to the psychological level of $3.0.
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