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Nio (NIO), the Chinese electric vehicle (EV) automaker, has seen its share price slide on Tuesday due to weak services data out of the mainland. Nio stock is down 1.3% to $10.86 at the time of writing on Tuesday morning – the first day of the trading week due to Monday’s Labor Day holiday.

Poor service sector data in the UK, Germany, and China seems to have confirmed that the global economy is losing a skip in its step, and this has led to a risk-off approach in the market on Tuesday. US Treasuries have seen their yields rise on the longer maturities, but the 3-month to 2-year segment bears a falling yield.

The NASDAQ Composite lost 0.5% at the start of Tuesday’s session, with the S&P 500 and Dow Jones indices losing slightly less. 

Nio stock earnings news: Caixin worries the world

China’s Caixin Services Purchasing Managers Index (PMI) for August declined from 54.1 in July to 51.8. This reading still shows an expanding services sector, albeit in a much-diminished state. 

Combined with the UK and Germany both providing Services PMIs on Tuesday morning that demonstrated a contraction in their respective economies, the Caixin reading gave the market a pessimistic view of the global situation. While Goldman Sachs now gives the US economy just a 15% chance of falling back into recession – in other words, a much better chance of sticking to the vaunted “soft landing” circumstance – weakness in other developed economies could easily spill over into the US economy. 

Hong Kong’s Hang Seng Index closed down 2.06% on Tuesday. 

Nio is coming off an impressive performance on Friday as vehicle deliveries in August soared, partially making up for the negativity surrounding last week’s Q2 earnings results. Lower delivery volumes and management’s price cuts during the second quarter led to a 25% dropoff in vehicle revenue.

Nio then returned on Friday with 19,329 in deliveries, a major uptick in demand from the second quarter. What’s more, management is guiding for deliveries between 55,000 and 57,000 in Q3. That target should be fairly easy to achieve since July saw 20,462 deliveries.

Nio now just needs to deliver between 15,209 and 17,209 in September to reach that milestone. This would amount to approximately a 150% increase in deliveries from the second quarter. 

CEO and Chairman William Bin Li even boasted last week that Nio’s current delivery trajectory has “propelled Nio to the top position in China's premium electric vehicle market for vehicles priced above RMB300,000.”

Nio stock forecast

Nio’s stock remains tethered to the $10.15 to $11.30 resistance zone. Outside of last week’s poor Q2 earnings results, in which NIO dropped to support at $9.50, buyers have been quick to pick up shares at the lower end of this range.

A break of that $11.30 range, which is quite likely as the calendar nears the October 1 date of Nio’s monthly delivery announcement, will give bulls reason to push the share price up to the $13 to $14 resistance range that was respected on a number of occasions last year. From there, breaking above $16 is the main level to watch. Bulls were immediately knocked down when they tested the level on August 4. 

(Click on image to enlarge)

NIO daily chart

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