Nio Shares Face Critical Test Amid Lowered Guidance

Chinese electric vehicle manufacturer Nio finds itself at a pivotal moment as conflicting signals emerge about its future prospects. The premium EV challenger recently delivered impressive third-quarter operational results, only to follow with a sobering reduction in its fourth-quarter outlook that has left investors questioning the sustainability of its recovery.

Institutional Investors Divided on EV Maker’s Prospects

The market reveals deep divisions about Nio’s trajectory through the actions of major financial institutions. A notable tug-of-war has emerged among sophisticated investors: WT Asset Management substantially increased its position with purchases exceeding $140 million in value, demonstrating significant confidence. Conversely, UBS executed a strategic retreat by divesting more than 40 million shares. This polarization extends to analyst coverage, where assessments range from deeply pessimistic to cautiously optimistic regarding the company’s long-term potential.

Strong Quarterly Performance Overshadowed by Guidance Cut

Nio’s third-quarter delivery figures reached approximately 87,000 vehicles, representing a substantial 41% year-over-year increase alongside improving margins. This performance had initially suggested the company was progressing steadily toward profitability, with CEO William Li reaffirming targets to reach breakeven by 2026. However, the positive momentum was abruptly halted when management revised fourth-quarter delivery expectations downward to a range between 120,000 and 125,000 vehicles. This conservative forecast stems primarily from the expiration of government purchase subsidies, which is expected to significantly dampen near-term consumer demand.

Legal Challenges Compound Operational Headwinds

Adding to the company’s operational challenges, Nio now confronts legal complications that have introduced additional uncertainty. Singapore’s sovereign wealth fund GIC has become involved in litigation concerning allegedly improper revenue recognition practices related to battery leasing arrangements. These allegations, which echo concerns previously raised in short-seller reports, have increased the stock’s risk premium and discouraged more cautious investors from establishing positions.

Should investors sell immediately? Or is it worth buying Nio?

In response to these mounting pressures, Nio has implemented stringent cost-cutting measures and declared an “era of ultra-focus.” The company is eliminating prestige projects like the Nio Phone to concentrate resources on core technologies, particularly battery swapping infrastructure and proprietary semiconductor development.

Technical and Market Pressure Intensifies

From a technical perspective, Nio shares face considerable downward pressure. The stock declined approximately 23% during the past month, closing Friday’s session at just €4.74. This price level places the equity significantly below both its 50-day and 200-day moving averages, indicating persistent bearish sentiment among market participants.

Analyst opinions reflect the company’s uncertain outlook. Barclays maintains an “Underweight” rating with a $4 price target, citing the reduced guidance as particularly concerning. Meanwhile, Freedom Capital emphasizes potential long-term margin improvement and recommends purchasing shares. Macquarie researchers express caution about political headwinds and note a concerning gap in new model launches until mid-2026.

Assessment

The coming weeks will prove critical for Nio as markets digest the disappointing guidance. Investors should monitor whether the stock can establish support around recent lows. The path to 2026 profitability appears increasingly challenging, and without government subsidy support, Nio must demonstrate that its business model can stand on its own merits. The company’s ability to navigate this transitional period will determine whether current pressures represent a temporary setback or a more fundamental concern.