Nio Stock Slumped 18.9% in September Despite a Big Geely Deal. Should You Buy the Dip?
Key Points
Nio has set ambitious electric vehicle delivery goals for Q4.
The Geely partnership, meanwhile, should expand Nio's commercial reach.
Nio (NYSE:NIO) sells premium and mass-market electric vehicles (EVs) and offers owners a perk: pull into a swap station with a drained battery and drive out with a full one. On Sept 28, Geely (OTC:GELYF), another automaker, signed a deal for a 30% stake in the unit that runs those stations.
Yet, Nio's stock fell and exited the month with 18.9% loss, according to data provided by S&P Global Market Intelligence.
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What's happening with Nio?
Nio kicked off the month by dropping its second-quarter financial results on the first day of September. The numbers looked incredible.
Vehicle deliveries surged 49%, and revenue jumped 69% year-over-year to RMB 32.1 billion ($4.7 billion). Volumes grew across all three of its brands: Nio, Onvo, and Firefly. The company's operating losses shrank 93% year-over-year to $51.2 million.
With those numbers, Nio's shares should have skyrocketed. Instead, they fell more than 10% in that week. Blame the earnings call.
Management revealed that rising prices for memory chips, batteries, and other materials had added about RMB 14,000 to the cost of every single car built since late last year. Management expects a further RMB 2,000-3,000 increase in the second half of 2026.
Analysts from JPMorgan (NYSE:JPM) were quick to downgrade Nio stock to neutral from overweight and slash its price target from $7 to $4.50 per share. Rising production costs amid intensifying competition in China could make it harder for Nio to pass costs to consumers.
The EV stock took a bigger hit after the Geely deal on Sept. 28. Geely is a major Chinese automotive conglomerate that owns a massive global portfolio of brands, including Volvo (OTC:VOLVF), Polestar (NASDAQ:PSNY), Zeekr, and Lotus.
Geely will pay mostly with its own commercial swap business (Yiyi Power) and about $95 million in cash to acquire a 30% stake in Nio Power. In return, Nio gets a 10% equity stake in Geely's charging arm, Haohan Energy, to link their charging networks.
The Geely deal is big. Is it time to buy Nio?
NIO enters the second half of 2026 with a strong product lineup and financial muscle (it ended Q2 with cash, cash equivalents, and deposits of nearly $8.4 billion).
Its flagship ES8 and ES9 SUVs continue to lead China's premium market above RMB 350,000. The ONVO brand leads large mid-market SUVs, while the third brand, Firefly, has dominated the market for high-end small cars for 15 straight months.
The Geely deal will also expand Nio Power's commercial reach since it will provide battery-swapping services for the new consumer-facing models Geely develops.
The payoff, however, will take time to show up, and Nio investors already seem to be running out of patience. Part of the frustration stems from Nio's September delivery numbers, which came out on Oct. 1: deliveries grew only 7.7% from a year earlier to 37,408 vehicles. Management has set a fourth-quarter target to average over 40,000 deliveries per month.
Two events will next reveal whether Nio closes that gap. October deliveries land in early November, and Q3 numbers will show whether the company can hold its vehicle margins despite higher costs.
JPMorgan Chase is an advertising partner of Motley Fool Money. Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.