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NIO Stock: What’s Causing Massive Losses This Month?

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NIO

Chinese electric car company NIO (NIO) announced its fourth-quarter of 2018 results on March 5, which didn’t impress investors, reflecting in its stock price action after the release. On March 6, the company’s stock saw a massive sell-off and tanked 20.9%. In January and February, NIO stock surged 23.7% and 21.4%, respectively. NIO’s solid gains in the first two months of 2019 attracted investors’ attention. They considered the price rally to be fueled by the company’s future growth estimates and future growth potential.

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Other key negative factors

During its fourth-quarter earnings event, NIO released its dismal vehicle delivery figures for January and February 2019. In January and February 2019, the company 1,805 and 811 units, respectively of its ES8 car model, much lower than the 3,089 and 3,318 units of ES8 delivered in November and December 2018, respectively.

In its fourth-quarter earnings report, the company said it accelerated car deliveries at the end of 2018 in anticipation of the Chinese New Year holidays and a reduction in Chinese government subsidies on electric cars in 2019. This move pushed NIO’s car deliveries at the end of 2018.

On NIO’s fourth-quarter earnings conference call, the management team suggested that—based on initial orders—its recently launched second electric SUV, the ES6, has received an underwhelming response compared to its model ES8.

These factors could also be to blame for hurting investor sentiment in March—apart from the cancellation of the company’s plans to build its own factory in Shanghai.

On March 26 at 3:32 PM ET, NIO was trading with 6.5% losses for the day. At the same time, Chinese tech giants (MCHI) that have invested in NIO Tencent Holdings (TCEHY) and Baidu (BIDU) were down 0.3% and 0.1%, respectively. In comparison, NIO’s American peer Tesla (TSLA) was up 2.8% for the day.

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