Brief Summary:
Nio investors may be concerned that the company’s third-quarter earnings projection will be similar to the one recently released by a rival.
After Monday’s poor economic report, Chinese officials lowered interest rates.
Nio’s (NYSE:NIO) delivery operations across Europe have been expanding.
What’s the Story About Nio’s Shares?
Nio‘s (NYSE:NIO) shares plunged today after a rival company announced its financial results for the second quarter. The stock was down as much as 4% today before recovering some of those losses. The stock was down 2.3% as of Tuesday at 2:45 p.m. ET.
What’s the Reason?
Yesterday, despite reporting a 63% year-over-year increase in deliveries during the second quarter, Li Auto frightened investors in Chinese electric vehicle (EV) producers by not providing an encouraging estimate for the third quarter. More gloom was added yesterday as China lowered interest rates in response to a slowdown in the world’s second-largest economy in July.
What’s Next?
Li Auto shipped almost 10,400 of its Li One electric vehicles in July alone. However, the company informed shareholders that it expects third-quarter car sales of only 27,000 to 29,000. This would be between a 7.5% and 15.5% growth from the previous year, far lower than the forecasted 39,000. Investors worry that this may reflect poorly on Nio’s second-quarter expectations.
The “zero COVID” policy may also be revealing the effects of multiple shutdowns on China’s economy. Authorities lowered interest rates on Monday in response to July statistics showing a general slowdown in economic growth. Manufacturing production, along with that of consumer expenditure and residential property, was among the dismal figures.
Meanwhile, The company’s exports to Europe are rising. After the summer, the business will start shipping its ET7 flagship luxury car to Germany. Over the weekend, industry observer InsideEVs published a story with footage showing a fleet of them arranged at a Chinese port for export.
Depending on an investor’s research and comfort level with risk, now might be a good time to buy Nio (NYSE:NIO) shares despite its recent decline due to concerns about its short-term production prospects after previous shutdowns. The company looks to be continuing its international expansion efforts.
Featured Image: Megapixl @Timonschneider
Author Shariq Khan 
