Why NIO, Walmart Lost Big in the Stock Market's Thursday Decline

Thursday brought some selling pressure to Wall Street, with major market benchmarks giving up ground but finishing well off their worst levels of the day. The Dow Jones Industrial Average (^DJI 0.69%) joined the S&P 500 (^GSPC 1.20%) and Nasdaq Composite (^IXIC 1.59%) with declines, but none of the indexes fell more than 1% on the day.

Data source: Yahoo! Finance.

Despite modest declines in the broad market measures, some stocks took much larger hits. NIO (NIO 0.25%) has been a big winner in the electric-vehicle (EV) industry, but its stock fell on Thursday in response to heightened competitive pressures. Meanwhile, retail giant Walmart (WMT -1.75%) was also a big loser for investors as it delivered mixed news in its quarterly financial report.

Hitting the brakes

Shares of NIO were down 5% on Thursday. That added to declines from previous days that have lopped off about 13% from NIO's best stock price of the week.

Some believe that NIO's drop was simply a pullback from the massive gains that the Chinese EV player has enjoyed recently. Certainly, NIO's stock has been volatile in both directions lately, and advances are often followed by pullbacks, and vice versa.

Image source: NIO.

However, there was some other news that might have had an impact on NIO. Tesla (TSLA 1.85%) reported that it would cut prices on the standard range variants of its Model 3 and Model Y mass-market models. That move was reportedly in response to the new introduction of various Chevrolet EVs from General Motors, but it signals the lengths to which Tesla might be willing to go in fighting for market share against NIO in the Chinese market, as well.

Electric-vehicle stocks have been highly popular, but there are a lot of companies vying for position. NIO will have to keep proving its mettle in order to keep its stock price moving higher in the long run.

A lower price for Walmart shares

Elsewhere, Walmart shares closed lower by more than 6%. Investors weren't pleased with everything they saw in the retailer's fourth-quarter report, even though some of the numbers were impressive.

Walmart posted record revenue for the fourth quarter and its 2021 fiscal year, with annual sales of almost $560 billion. Comparable sales climbed 8.6% in the fourth quarter, with e-commerce revenue soaring 69%. Adjusted earnings per share for the quarter inched higher from year-ago levels, and full-year profit of $5.48 per share was up about 11% from the previous fiscal-year's results.

However, investors had hoped to see better bottom-line performance from Walmart. In addition, some were nervous about the potential impact from Walmart boosting wages for many of its workers above the $15 per-hour mark. Walmart warned that revenue growth will slow in the coming fiscal year, as well, with expectations for low-single-digit percentage gains, even after accounting for anticipated divestitures that will actually cause total revenue and net income to decline.

Still, dividend investors got a bit of a silver lining in the report, as Walmart boosted its dividend for the 48th straight year. Shareholders won't necessarily be able to celebrate lavishly, though, as the company kept its payment boost to $0.01 per share, paying $0.55 per share on a quarterly basis.

What'll be interesting to see is how Walmart responds to the vaccine rollout. As emphasis on essential goods wanes, there could be a reversal of some of the growth Walmart has seen in the past year.