Wall Street continued to mark time on Tuesday as early gains started to erode as the morning went on. Some encouraging signs on the trade front created some optimism shortly after the market opened, but many investors are still concerned about several different risks facing economies across the globe. As of 11:30 a.m. EDT, the Dow Jones Industrial Average (DJINDICES:^DJI) was up 28 points to 26,978. The S&P 500 (SNPINDEX:^GSPC) picked up 3 points to 2,995, but the Nasdaq Composite (NASDAQINDEX:^IXIC) was down 20 points to 8,093.
Earnings season is still several weeks away, but a few companies reported results that gave some mixed signals from the auto industry. Chinese electric vehicle manufacturer NIO (NYSE:NIO) didn't give investors what they'd hoped for, but dealership specialist CarMax (NYSE:KMX) saw more encouraging signs in the U.S. market.
NIO loses its charge
Shares of NIO plunged 22% after investors reacted to discouraging results in its second-quarter financial report. Total revenue dropped 7.5% from levels three months ago, and recall costs weighed on NIO's bottom line, sending net losses rising by 25% compared to last quarter and by 83% compared to Q2 2018.
Many see demand for electric vehicles in China being strong, but NIO's delivery figures didn't seem to bear that out. The company delivered 3,140 of its ES8 model vehicles during the second quarter, down by almost 850 vehicles from Q1. NIO delivered more than 400 ES6 cars as well, but that still left total deliveries down 11% from three months ago. It also announced job cuts of about 2,100 workers.
Furthermore, NIO took the extraordinary step of choosing to cancel its conference call. It didn't offer any explanation, but the move seemed to unnerve investors who wanted more details on how the quarter went.
Investors in NIO have been disappointed with its performance lately, and today's results did little to change their skepticism. Unless the company can tap into the fast-growing electric vehicle market more effectively, the automaker will likely face even bigger challenges in the near future.
CarMax hits the gas
Meanwhile, shares of CarMax were little changed Tuesday morning following its release of results from the second quarter. The auto dealer's numbers were far more attractive than NIO's, featuring overall revenue gains of 9% and a 13% rise in earnings per share.
CarMax's fundamentals pointed to solid conditions in the auto market. Comparable used-car unit sales were up 3.2% from year-ago levels, as CarMax sold 6.2% more used cars during the period than it did in the previous year's second quarter. The company's wholesale division also saw success, with unit sales there climbing at a 4.7% pace.
Part of CarMax's success has come from helping its buyers purchase vehicles in multiple ways. Customers can visit physical locations or shop online, but a common way that many tend to shop is to go online first and then come in to see a vehicle in person. CarMax has invested a lot in providing an omnichannel experience that makes it easier for customers to make that online-to-in-person transition quickly, and it's gradually rolling that service out across its network.
Some investors have feared that the move to omnichannel selling could hurt CarMax's margins. Yet at least for now, that's not having a huge impact on the company's revenue or profit, and that's good news not just for CarMax, but for the auto industry as a whole.