What happened
Shares of Nio (NYSE: NIO), the Chinese electric vehicle marker, were tumbling this morning as investors digested two pieces of negative news: ongoing fears that some Chinese stocks could be delisted from U.S. exchanges and an analyst's price target cut for one of Nio's competitors.
The EV stock was down 3.5% at 11:21 a.m. ET.
So what
First up, Nio investors may be a bit nervous today after the Chinese ride-sharing company Didi Global said that it's being investigated by the Securities and Exchange Commission about its IPO last year.
Image source: Nio.
Didi didn't disclose many details about the probe, but it comes on the heels of the Chinese government cracking down on U.S.-listed Chinese stocks. Regulatory rules from both countries have caused the share prices of many Chinese stocks to tumble over the past year.
Nio investors are likely keeping a close eye on Didi's news and wondering if more difficulties are ahead for other Chinese stocks.
Additionally, one of Nio's EV peers, Li Auto, received a price target cut from Deutsche Bank analyst Edison Yu. The analyst lowered his price target for Li Auto from $34 to $28 before the company reports its earnings next week.
Nio investors may interpret the price target cut as a sign that Li Auto could report a disappointing quarter, indicating larger headwinds for the broader EV market.
Now what
Nio investors have been on a wild ride over the past year, as the company's share price has plummeted by 57%. And investors should probably prepare for more share price swings.
The Federal Reserve is meeting today and tomorrow to make a decision about hiking interest rates to tackle inflation that's reached a 40-year high. That's putting a lot of downward pressure on stocks, and it could continue, as the Fed is expected to increase rates throughout the year.
That doesn't mean Nio is a bad long-term investment, but shareholders should know that as the market processes shifting news about Chinese stocks, the economy, and inflation, there could be more instability from Nio's stock.
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Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nio Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
