What happened
Nio (NIO 8.72%) stock has tanked more than 40% in the last month, far outpacing the approximately 14% decline in the S&P 500 index. Nio shares continue to slide today, down 2.5% as of 11:25 a.m. ET. The stock was down as much as 7% at the day's lows.
So what
Today's drop comes mostly from a double dose of unwelcome macroeconomic news. In the U.S., inflation data was again worse than expected. The Consumer Price Index rose 0.4% in September month over month, which was an acceleration after two months of slower monthly growth. Nio doesn't yet do business in the U.S., but the prospect for the Federal Reserve to have to raise rates even more than hoped has global implications. A second dose of bad news came from the International Energy Agency (IEA), saying in its October monthly market report that the recently announced oil production cuts from OPEC+ could lead to a global recession.
Image source: Nio.
Now what
Specifically, the IEA said, "With unrelenting inflationary pressures and interest rate hikes taking their toll, higher oil prices may prove the tipping point for a global economy already on the brink of recession."
Nio has introduced several new models recently and is expanding shipments into Europe. A global recession would likely have a severe impact on its growth plans. The company reported a widening net loss of $412 million in the second quarter due to higher operating expenses. Investors know that its path to profitability will be slowed if consumer demand dries up from a slowing economy or recession in its markets. That has led to less of an appetite for riskier assets, including Nio stock.
