Why NIO Stock Is Trading Lower Today

What happened

Shares of Chinese electric-vehicle maker NIO (NYSE: NIO) were trading lower on Wednesday, as coronavirus concerns put pressure on stocks across the U.S. market.

As of 1 p.m. EDT, NIO's American depositary shares were down about 3.8% from Tuesday's closing price.

So what

Wednesday brought a return of selling pressure to the U.S. equity markets, as fast-rising coronavirus infection numbers drove fears of renewed lockdowns that could derail the global economic recovery. As of 1 p.m. EDT, the S&P 500 Index was down 2.95%.

NIO was one of several electric-vehicle stocks hit hard by that selling pressure. On the one hand, it's understandable: NIO's shares have gained about 580% in 2020, driven by investor enthusiasm for electric vehicles generally -- as well as by the company's much-improved financial condition and growing sales in recent months.

NIO Chart

NIO data by YCharts.

In that light, a pullback seems entirely understandable.

On the other hand, auto investors should keep in mind that NIO doesn't yet sell vehicles in the U.S. (or in Europe, where COVID-19 cases are also rising). U.S. and European economic concerns will only affect NIO indirectly, to the extent that they impact the affluent, tech-savvy Chinese consumers that make up its customer base.

A blue NIO EC6, a sporty upscale electric SUV.

September saw the first deliveries of NIO's newest model, the EC6. Image source: NIO.

Now what

In fact, stepping back from U.S. concerns, there's a lot to like about NIO ahead of its third-quarter earnings report next month. It was a strong quarter by any measure: NIO's sales surged 154% from a year earlier, outperforming its own upbeat guidance; it successfully raised capital in a secondary offering; and it upgraded its assembly line to increase its monthly production capacity by about 25%.

Long story short: Despite concerns about the U.S. and Europe, NIO's growth story remains intact for the moment. We'll look forward to hearing more when the company reports earnings next month.

10 stocks we like better than NIO Inc.
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and NIO Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of October 20, 2020

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.


More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.