When I last wrote about Nio (NYSE:NIO) stock last month, I made the case that it was ready to take another tumble. So far, that’s ended up being the case. Since late April, when shares in the Chinese electric vehicle (EV) play were finding support at around $35-$40 per share, the stock has seen a further slide. Trending lower, it’s currently at around $32 per share.

The reason? For one, fading interest in EV stocks. Other major names in this space, including Tesla (NASDAQ:TSLA) continue to pull back. Underwhelming delivery numbers for April, largely due to the global chip shortage, are also weighing down on it.

It’s not hard to figure out why Nio has continued to move in the wrong direction. But is there a path for shares to begin a rebound after falling more than 50% off their highs?

Yes, once it gets over the chip shortage, results could pivot back to growth mode. Initial success in its expansion into Europe later this year could help as well. Even so, with things likely not improving for several months, there’s plenty of reason for shares to sell off further in the interim.

NIO Stock, Its Deliveries, and The Global Chip Shortage

April 2021 deliveries may have been up 125% year-over-year. But on a sequential (month-over-month) basis, Nio’s numbers weren’t exactly impressive. The EV maker delivered 7,102 vehicles last month, down 2% compared to March.

Now, like I mentioned above, much of this has to do with supply chain issues. Namely, the global chip shortage. Chairman William Li, on the company’s earnings call on April 30, said the company will start getting over this headwind by the third quarter of the year. In the meantime, though, the company’s level of growth isn’t exactly going to wow investors. For the current quarter (ending June 30), deliveries are only expected to rise 5%-10% compared to last quarter.

Li may be putting a good spin on the situation. But, relatively low levels of growth is not a good sign for NIO stock, which continues to be valued based on its perceived long-term growth potential. Even after its sell-off, shares remain richly-priced, with a forward price-to-sales ratio of 10.7x. If results remain weak, it’ll be tough to sustain such a premium valuation. Sure, the chip shortage is a near-term hiccup. It’s not something that will completely destroy this company’s long-term prospects.

Some more optimistic about the situation, like InvestorPlace’s Will Ashworth, see the current uncertainty as a buying opportunity. Yet, while you may be able to buy it today, and still profit down the road, shares will likely continue to drift back until the chip issue clears up. With this in mind, why buy now, when you could potentially enter a position at $20-$30 per share?

A Lot Is Riding on Its Initial Success in Norway

The company’s chip shortage headwinds may be what’s top of mind among those interested in NIO stock. But, another development making the rounds has been its official announcement of its European expansion plans. Smartly picking a well-established European EV market (Norway), investors will soon know whether this EV maker’s global ambitions are realistic, or if competition from better capitalized international rivals will limit its ability to expand beyond China.

Norway may be only a first move. But, it’s an important test that Nio needs to pass with flying colors. It’s not just high projected growth in its home market that’s baked into its stock price. Investors continue to value this company based on the perception it will give legacy automakers a run for their money in Europe, and possibly one day in the U.S. auto market as well.

But the company may be spreading itself too thin. Still trying to establish itself at home, it may not have the resources to fund expansion into new markets with full force. And with the same global rivals it’s competing with in China much more established in Europe, it could wind up failing gaining a foothold.

A prudent approach would be to wait until it’s profitable at home before going global. But any delays in its expansion plans would be detrimental to the stock price. All but forced to proceed, the jury’s still out whether it will pan out as expected.

Bottom Line: Continue to Steer Clear

The chip shortage doesn’t mean “game over” for Nio. Growth may return once it’s resolved. Also, if its upcoming move into Norway shows signs of success, there’s more reason to believe this early stage company, still valued as if it’s an established player, will live up to sky-high expectations.

In the meantime, however, expect its current hiccups to continue putting downward pressure on NIO stock. Not yet finding its floor, its share price could still drift back below $30 per share.

On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.