Please ensure Javascript is enabled for purposes of website accessibility

Why NIO Stock Is Slipping Wednesday

By John Rosevear – Updated Jul 16, 2020 at 8:28AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is it just profit-taking, or is something bigger happening?

What happened

Shares of Chinese electric-vehicle maker NIO (NIO -0.92%) were trading lower on Wednesday, as investors took profits after a huge run-up in the stock's price over the last month. 

As of 2 p.m. EDT, NIO's shares were down about 5.2% from Tuesday's closing price -- but still up over 70% since the beginning of July.

So what

There was no big news (or even not-so-big news) driving NIO's shares lower on Wednesday. My sense is that this is just a pullback after a big run -- no surprise given the gains that NIO investors have seen over the last few weeks.

NIO Chart

NIO data by YCharts.

NIO's share-price surge began in earnest after it reported its second-quarter sales results early in July. The company said that its vehicle sales in the quarter had nearly tripled from the year-ago period (up 191% to 10,331, to be precise), as the coronavirus pandemic receded and NIO was able to take advantage of the expanded sales infrastructure it put in place last year.

NIO has come a long way from where it was in February, with sales reeling amid the pandemic and auto investors growing concerned about its dwindling cash reserves. But now, following cash injections from early investor Tencent Holdings and economic-development authorities in China's industrial heartland, NIO has rising sales, money in the bank -- and investors growing excited.

A blue NIO EC6, a crossover SUV with a coupe-like roofline.

NIO's latest product is the EC6, a sleek variant of its five-passenger ES6 crossover. Image source: NIO.

Now what

Given the strong sales result, investors will be eager to hear from CEO William Bin Li and his team when the company reports its second-quarter earnings result. Expect that to happen sometime in the middle of next month.

John Rosevear has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tencent Holdings. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Nio Inc. Stock Quote
Nio Inc.
NIO
$15.62 (-0.92%) $0.14
Tencent Holdings Limited Stock Quote
Tencent Holdings Limited
TCEHY
$33.86 (0.12%) $0.04

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
326%
 
S&P 500 Returns
102%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/03/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.