Nio stock is falling despite strong revenue growth: now what?

Nio stock price dropped to a crucial support level this week as investors continued selling Chinese electric vehicle shares. It was trading at $5.05, and may be at risk of further downside after forming a risky chart pattern despite its strong revenue and delivery growth.

Nio stock price technicals point to more downside

The weekly chart shows that Nio shares peaked at $7.95 in September 2025 and then pulled back to a low of $4.35. A closer look shows that the stock has slowly formed a head-and-shoulders pattern, a common bearish reversal sign in technical analysis. It is now trading along this pattern’s neckline. 

The stock has slumped below the 50-week Exponential Moving Average (EMA) and is about to fall below the Strong, Pivot, Reverse of the Murrey Math Lines tool of $4.70. 

A break below the lower side of the H&S pattern points to more downside, potentially to the key support level of $3, its lowest level in April last year. If this happens, it will drop by about 40% below the current level.

On the other hand, a move above the right shoulder section of $7 will invalidate the bearish outlook and point to further gains ahead.

Nio stock chart | Source: TradingView

Nio’s retreat mirrors that of other Chinese EV companies

The ongoing Nio stock retreat mirrors that of other Chinese EV companies like Li Auto, XPeng, BYD, and Li Auto. All these stocks have plunged by double digits from their all-time highs.

The retreat has coincided with the recent decision by the Chinese government to start scaling down its EV subsidies, a move that will make them more expensive over time. 

Most importantly, the Chinese market is now flooded with EVs and Internal Combustion Vehicles (ICE). A look at most EV companies, including Xiaomi, Geely, Polestar, and Tesla shows that they have boosted their output in the past few months.

Other companies in the ICE industry, like Mercedes-Benz, Toyota, Nissan, and Dongfeng, have continued to boost their production. The implication of all this is that companies like Nio and Xpeng have been engaged in a price war, a trend that will continue in the foreseeable future.

Still, despite all this, Nio is one of the best-performing Chinese EV companies, with the most recent results showing that its deliveries rose by 62.3% in May to 37,705. Its YTD deliveries jumped by 68.7% to 150,526.

Most of its sales are still from its Nio brand, which jumped to 20,013, while 12,029 were from its ONVO brand. The management has admitted that it needs to do more work to boost ONVO’s brand appeal in the country. 

Still, it is seeing a modest demand for ONVO L80. Nio has also boosted its model lineup, including by launching ES9, which is the successor to the most popular ES8 model. 

Analysts believe that the annual revenue jumped by 56% YoY to 136.6 billion yuan ($20 billion), followed by $22 billion next year. 

A key challenge for the company is its profitability. While it made a net profit in the fourth quarter of last year, this reversed in the first quarter. Despite all this, analysts anticipate that it will make a net profit of 0.43 CNY per share this year, followed by 1.01 CNY next year.