Chinese electric vehicle maker NIO today announced its forward guidance. The company has lowered its expectations for fourth quarter deliveries.
NIO now projects that 38,500-39,500 electric vehicles to be delivered in Q4 2022 rather than its initial estimate of 43,000-48,000 vehicles.
Nio has cited supply chain disruptions due to Covid outbreaks and lockdowns in major cities across China which has slowed down operations. Even though there are delivery delays and registration issues, the company’s Q3 was strong for production and sales, with NIO reporting a 33% increase in revenue from its previous year with continued high demand for new models.
Just last week, NIO launched two new flagship EV SUV models, the EC7 and the ES8. Both new models will start shipping in May and June 2023.
The stock did not react well to the news. At time of writing, NIO stock is down -8.20%.
The stock did look like it confirmed a double bottom breakout pattern back at the end of November 2022, but there was no momentum, and the stock instead turned. Perhaps a combination of broader stock market reaction post Federal Reserve, and the current situation in China.
The stock is about to test the important $10.00 psychological support zone, however, my major support zone comes in lower at around $9.00.
If NIO were to break and close below $9.00, the next major support would come in just above $5.50.
Lowering forward guidance is something traders and investors should prepare for. Supply chain disruptions is one thing, but if we begin to see consumer spending beginning to drop, then it would be a strong sign of recession. Companies will miss earnings and issue lower forward guidance which will translate to lower stock prices.
