Shares of Chinese electric-vehicle maker NIO (NYSE:NIO) were trading lower on Wednesday, as coronavirus concerns put pressure on stocks across the U.S. market.
As of 1 p.m. EDT, NIO's American depositary shares were down about 3.8% from Tuesday's closing price.
Wednesday brought a return of selling pressure to the U.S. equity markets, as fast-rising coronavirus infection numbers drove fears of renewed lockdowns that could derail the global economic recovery. As of 1 p.m. EDT, the S&P 500 Index was down 2.95%.
NIO was one of several electric-vehicle stocks hit hard by that selling pressure. On the one hand, it's understandable: NIO's shares have gained about 580% in 2020, driven by investor enthusiasm for electric vehicles generally -- as well as by the company's much-improved financial condition and growing sales in recent months.
In that light, a pullback seems entirely understandable.
On the other hand, auto investors should keep in mind that NIO doesn't yet sell vehicles in the U.S. (or in Europe, where COVID-19 cases are also rising). U.S. and European economic concerns will only affect NIO indirectly, to the extent that they impact the affluent, tech-savvy Chinese consumers that make up its customer base.
In fact, stepping back from U.S. concerns, there's a lot to like about NIO ahead of its third-quarter earnings report next month. It was a strong quarter by any measure: NIO's sales surged 154% from a year earlier, outperforming its own upbeat guidance; it successfully raised capital in a secondary offering; and it upgraded its assembly line to increase its monthly production capacity by about 25%.
Long story short: Despite concerns about the U.S. and Europe, NIO's growth story remains intact for the moment. We'll look forward to hearing more when the company reports earnings next month.