Nio’s Stock Price Drops Below $5 Support As Selloff Continues

Nio Inc.’s stock has breached a critical support level, falling below $5 as selling pressure intensifies. The electric vehicle maker’s shares traded 4.28% lower at $4.92, marking a significant decline after the $5 mark had previously provided a floor in recent trading sessions.

Nio’ stock price sits 38% lower than its high just three months ago, raising concerns among investors about the company’s near-term prospects. The $5 level had previously acted as resistance in August before a substantial rally, making its breach today all the more noteworthy.

Several factors appear to be contributing to this downward pressure. A key event was the equity offering in September 2025, where Nio issued over 181 million American Depositary Shares (ADS) at $5.57 each, raising $1 billion. While intended to fuel growth, this move diluted existing shares, triggering an immediate negative market reaction with the stock price falling approximately 10% following the announcement.

Financial performance has also weighed on the stock. Nio’s first-quarter 2025 results revealed total revenue of RMB12 billion, a 22% year-over-year increase but a 39% decline quarter-over-quarter. Although the gross profit margin improved to 7.6%, operational losses remained substantial at RMB6.4 billion. These figures have led to analyst downgrades, with firms like Macquarie reducing their price target to $3.90, citing concerns over cash burn and intensifying competition within the electric vehicle sector.

Price Targets

Adding to the challenges, legal issues have surfaced. Singapore’s sovereign wealth fund, GIC, has filed a lawsuit against Nio, alleging inflated revenues through the unlawful recognition of over $600 million from an affiliated battery asset firm. Such allegations have further eroded investor confidence, raising questions about the company’s financial reporting practices.

The broader market dynamics are also playing a role. The Chinese electric vehicle market is undergoing shifts, with the government addressing price wars and companies like BYD scaling back aggressive discounting. While this could present opportunities for premium brands like Nio, overall market sentiment and consumer confidence remain fragile, impacting sales and stock performance.

Operational hurdles, such as supply chain bottlenecks, have further complicated matters. Shortages of 85 kWh battery packs have led to delivery delays, frustrating customers and potentially affecting end-of-year subsidy eligibility. These operational challenges have added to the negative sentiment surrounding the stock.

The mix of equity dilution, financial underperformance, legal challenges, market competition, and supply chain issues has created almost a perfect storm, driving Nio’s stock below the $5 mark and raising questions about its near-term trajectory. Could the stock find a floor, or is further pain on the horizon for NIO holders?