Nio's stock tumbled to its lowest level since July 2025, hitting $4.20, after the Chinese electric vehicle maker reported a mixed second-quarter scorecard. Despite a 69% year-over-year surge in revenue to $4.7 billion, the company's net loss expanded to $77.8 million, reversing the profit it posted in the fourth quarter of last year. The shares have now fallen more than 40% from their 2025 peak, underscoring investor concerns about persistent red ink even as sales grow.
Revenue growth masks persistent losses
Nio's top-line performance was robust: revenue climbed 27.5% sequentially, driven by strong demand for its vehicles. Gross margin improved to 18.4% from 10.3% a year earlier, though it slipped from 19% in the prior quarter. Management attributed the improvement to higher-margin models and cost optimization, but the bottom line remains under pressure.
The company's delivery guidance for the third quarter points to continued growth—between 108,000 and 111,000 vehicles—with revenue expected to rise over 50% year-over-year. Yet the market's reaction suggests that investors are focusing on the widening losses and the broader challenges facing China's EV sector.
Broader EV sector under pressure
Nio's post-earnings decline mirrors a wider selloff in Chinese EV stocks. BYD shares also dropped to a multi-month low despite reporting strong profits, while Xpeng has fallen 60% from its 2024 high. Li Auto is down 30% this year, and Polestar has shed over 40%. Even Xiaomi and Zeekr, which have seen strong sales, have experienced significant share price declines.
In its own earnings report, BYD highlighted industry headwinds, including higher costs and sluggish demand. Many Chinese EV makers are now expanding internationally to offset weak domestic consumption, a strategy Nio is also pursuing.
Technical outlook turns bearish
From a technical standpoint, Nio's chart has deteriorated. The stock broke below the key support level of $4.40—its February and March low—confirming a bearish breakout. It has also formed a head-and-shoulders pattern, a classic reversal signal. The shares are trading below all major moving averages and the Supertrend indicator, while the Relative Strength Index (RSI) has fallen to 34, its lowest since July 14.
Given these signals, the path of least resistance appears lower, with the next potential support around $3.50. However, a falling wedge pattern has also emerged, which could indicate that a rebound is possible in the coming weeks. Investors will be watching whether Nio can stabilize above $4.00 or if the downtrend accelerates.
For context, the broader market has shown resilience recently, with the S&P 500's strong August potentially offsetting seasonal September weakness. But Nio's fundamentals and technicals suggest it may continue to underperform until profitability improves.
This article is for informational purposes only and does not constitute financial advice.
