Nio Stock Forecast: NIO falls as Chinese economy outlook downgraded by Goldman Sachs
Aa
Share
- Goldman Sachs has cut its outlook for 2023 Chinese GDP growth to 5.4%.
- Nio cut model prices by $4,200 earlier in June.
- May deliveries from the electric-vehicle company dropped 12% YoY.
- NIO stock drops 3% in Tuesday premarket.
Nio (NIO) stock is on the backfoot on Tuesday after Goldman Sachs released an update to its economic outlook for China on Monday that forecasts 5.4% growth in 2023. Goldman’s prior forecast had predicted 6% growth.
This news sent most Chinese American Depository Shares (ADRs) lower early Tuesday, including Nio. The stock is down 2% at $9.25 in Tuesday’s first hour of trading, while the broader market also looks pessimistic. NASDAQ 100, S&P 500 and Dow futures are all dropping around 1% at the time of writing.
Nio stock news: Chinese economy upsets again
A narrative has begun to set in across Wall Street. It follows a generally pessimistic approach to Chinese equities. If it’s not related to the Chinese government’s crackdown on tech companies, then pundits point out that Chinese growth is faltering in the post-pandemic world. If it’s not related to the US belief that China is imminently prepared to invade Taiwan – and thus experience repercussions from US or EU sanctions – then they say that China’s unwillingness to allow US regulators to view audits from ADR-linked companies makes them uninvestable. They just can’t seem to win.
Goldman’s new downgrade of Chinese economic growth signals yet another fault line in the deteriorating relationship between US investors and the once beloved Chinese equity market. Chinese youth unemployment rose to a record high last week, and retail sales, industrial growth, and fixed asset investment figures all showed a flagging level of growth over the past month.
In unrelated but important news, Alibaba’s (BABA) long-time CEO on Tuesday left his position. Daniel Zhang will be leaving the company to head up Alibaba’s new cloud computing spinoff. This news was previously reported, but BABA stock still sold off 2% on the news that Joseph Tsai will take over as chairman. The cloud computing segment is viewed as the most profitable part of Alibaba.
Nio delivered 6,155 electric vehicles in May – a 12.4% decrease from the year-ago quarter. In response, management cut prices by an average of $4,200. To make matters worse, Nio’s gross margin in the first quarter dropped to 1%. Just one year ago, this figure was close to 14%.
Nio stock forecast
Nio stock broke above its five-month descending trendline last week. Additionally, bulls grew excited when NIO stock conquered the $9.50 resistance level. On Friday, however, this all changed. Nio stock descended below the $9.50 level, and bulls are uncertain whether they can regain some semblance of power.
The 9-day and 21-day moving averages are both merging near $8.25, and that is most likely the best idea for a future support level. Otherwise, NIO could descend to the $7.50 region near for a retouch of the former resistance trendline.
NIO daily chart
