XPEV - Why Is NIO Stock Down Today?
2023-08-08 14:38:19 ET
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Among the more popular Chinese electric vehicle (EV) stocks is undoubtedly Nio (NYSE: NIO ). Like many other China-based EV names (and EV companies in general), Nio’s valuation has rocketed higher this year. Indeed, NIO stock has more than doubled on a year-to-date basis. Accordingly, today’s decline of roughly 5% may have some scratching their heads.
After all, it wasn’t long ago (Aug. 1 to be exact) when investors piled into this stock in a big way, after the company reported huge production numbers . The hope was, at the time, that continued sky-high growth in the Chinese EV sector could continue. Overall, a broadly bullish narrative has provided a rising tide lifting nearly all boats in this sector.
Unfortunately, today’s move lower in Nio and other rivals, including Xpeng (NYSE: XPEV ) and Li Auto (NASDAQ: LI ), appears to be due to weak economic data released today. Let’s dive into what’s spooking investors in Nio and its U.S.-listed Chinese peers today.
Last week’s strong deliveries numbers pointed to the potential for a strong showing during this week’s release of key economic indictors. However, weaker-than-expected exports data, as well as some contrasting data around passenger car sales have many Chinese EV companies trading lower today.
Weaker global demand appears to be taking hold, as interest rates remain robust around the world. Additionally, a weakening yuan should be good for exports but may hurt companies with a domestic focus on China.
Today’s move appears to describe a shift in investor interest away from Chinese companies. This is due to previous expectations coming in from much more aggressive levels. While data has been mixed of late, investors appear to be taking a more cautious view of higher-growth companies. Indeed, companies like Nio are likely to see the vast majority of their revenue and earnings come years down the road. And with uncertainty picking up, that’s a reason in and of itself for investors to remain cautious.
On the date of publication, Chris MacDonald 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 .
Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.
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