Insights

What’s Driving Shares of Nio Lower Today

What happened
Nudging nominally higher yesterday, shares of Nio (NYSE: NIO) ended the trading session 0.8% higher than where the electric vehicle (EV) manufacturer’s stock finished on Friday. But it seems like the enthusiasm that investors felt for the stock to start the week has tapered off. Instead, ongoing fears of lockdowns in China are weighing more heavily on investors’ minds, leading the stock to give back yesterday’s gains and head even lower.
As of 11:27 a.m. ET, shares of Nio have dropped 5.1%.
So what
Although the news related to Nio has been dour recently, the company attempted to inspire confidence with some positive PR this morning. Nio reported that it completed assembly of the 200,000th vehicle at its manufacturing facility in Hefei today. Highlighting the increased efficiency that it has reached over the past few years, Nio stated that while it has taken almost four years to achieve the production milestone of 200,000 units, the company has produced 100,000 vehicles over the past year alone.

Image source: Getty Images.

The company’s feat, however, is falling on deaf ears. Instead, investors continue to be concerned about the potential for the Chinese government to impose stricter lockdowns in an attempt to prevent the spread of COVID-19 cases. Reuters reported today that most of Beijing’s 22 million residents are waiting in line to get tests, seeking to minimize the spread of the disease. Consequently, there are fears of lockdowns that could further affect supply chains or shutter factories, hampering production.
Now what
Concerns that supply chain disruptions and factory closings may occur as a result of COVID-19 cases rising in China are unlikely to abate anytime soon — especially with the Chinese government taking such an aggressive stance toward slowing the spread of the virus. Today’s drop in Nio’s stock, therefore, isn’t all that surprising. In fact, it won’t be much of a shock if the growth stock tumbles even more in the coming days.
Scott Levine has no position in any of the stocks mentioned. The Motley Fool owns and recommends Nio Inc. The Motley Fool has a disclosure policy. –

What happened

Nudging nominally higher yesterday, shares of Nio (NYSE: NIO) ended the trading session 0.8% higher than where the electric vehicle (EV) manufacturer’s stock finished on Friday. But it seems like the enthusiasm that investors felt for the stock to start the week has tapered off. Instead, ongoing fears of lockdowns in China are weighing more heavily on investors’ minds, leading the stock to give back yesterday’s gains and head even lower.

As of 11:27 a.m. ET, shares of Nio have dropped 5.1%.

So what

Although the news related to Nio has been dour recently, the company attempted to inspire confidence with some positive PR this morning. Nio reported that it completed assembly of the 200,000th vehicle at its manufacturing facility in Hefei today. Highlighting the increased efficiency that it has reached over the past few years, Nio stated that while it has taken almost four years to achieve the production milestone of 200,000 units, the company has produced 100,000 vehicles over the past year alone.

Image source: Getty Images.

The company’s feat, however, is falling on deaf ears. Instead, investors continue to be concerned about the potential for the Chinese government to impose stricter lockdowns in an attempt to prevent the spread of COVID-19 cases. Reuters reported today that most of Beijing’s 22 million residents are waiting in line to get tests, seeking to minimize the spread of the disease. Consequently, there are fears of lockdowns that could further affect supply chains or shutter factories, hampering production.

Now what

Concerns that supply chain disruptions and factory closings may occur as a result of COVID-19 cases rising in China are unlikely to abate anytime soon — especially with the Chinese government taking such an aggressive stance toward slowing the spread of the virus. Today’s drop in Nio’s stock, therefore, isn’t all that surprising. In fact, it won’t be much of a shock if the growth stock tumbles even more in the coming days.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool owns and recommends Nio Inc. The Motley Fool has a disclosure policy.

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