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Why Shares of Niu Technologies Are Crashing Today

What happened

Niu Technologies (NASDAQ: NIU) reported third-quarter earnings today, and it failed to charge up the market's excitement. To the chagrin of investors, the electric scooter manufacturer failed to meet analysts' top- and bottom-line expectations.

As of 12:51 p.m. ET on Monday, shares of Niu were down 16%.

Person riding electric scooter

Image source: Getty Images

So what

Niu Technologies reported sales of 1.2 billion yuan ($187.7 million) for the third quarter, a 37.1% year-over-year increase. But investors had higher hopes for the company, and were disappointed that it didn't meet analysts' estimate of 1.4 billion yuan. The earnings were a sore spot on the income statement as well. Analysts expected earnings per share (EPS) of 1.18 yuan, but the company reported EPS of only 0.57 yuan.

While international sales had been a driving force behind the company's growth over the summer, foreign markets failed to deliver a comparable performance last quarter. In fact, Niu largely attributed the contraction in its gross margin from 20.9% in the year-ago quarter to 20% in the recently completed quarter to weaker international sales. It reported that the number of e-scooters sold in international markets was 11.2% lower than a year ago.

Now what

Niu Technologies failed to meet expectations last quarter, but management seems hopeful about the future. In the press release accompanying the earnings report, CEO Yan Li said, "The widened product portfolio and channel coverage also laid a strong foundation for our growth in Q4 and 2022." Investors, however, should be circumspect about this growth stock and wait to see how the company does in the coming quarters.

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Scott Levine 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.

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