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Why Niu Technologies Stock Fell 10.8% Last Month

By Keith Noonan - Jun 6, 2021 at 1:39PM

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Despite a big pullback from the lifetime high it hit in February, the EV stock is still up roughly 20% year to date.

What happened

Shares of Niu Technologies (NIU 3.40%) dipped 10.8% in May, according to data from S&P Global Market Intelligence. Many small and mid-cap players in the electric vehicle (EV) space saw their valuations pull back last month, and the China-based electric scooter company participated in the sell-off. 

NIU Chart

NIU data by YCharts

Despite closing out the month with its share price down double digits, the stock did get a boost after Niu released its first quarter results. The company published its first quarter earnings on May 17, and it delivered another period of impressive sales growth. 

Three Niu electric mopeds.

Image source: Niu Technologies.

So what

Niu posted sales of 547.3 million Chinese yuan (approximately $85.6 million) in the first quarter, good for growth of 135% year over year. The company's non-GAAP (adjusted) net income comes in at 6.7 million yuan (approximately $1.05 million), up from a loss of 18.6 million yuan (approximately $2.9 million) in the prior-year quarter.

The company sold 149,649 electric scooters in the first quarter, representing growth of 272.6% year over year. Of these unit sales, 144,654 came from the Chinese market -- nearly 97% of the total. 

For now, the two-wheeled EV market looks less crowded compared to EV categories including sedans, trucks, and SUVs, but it could see a flood of new entrants. Niu is already facing some pricing pressure in the Chinese market, and it hasn't had much success in growing its sales in other regions. 

Now what

Niu Technologies has inched higher early in June's trading. The company's share price is up roughly 1.3% in the month so far. 

NIU Chart

NIU data by YCharts

Niu Technologies stock is up roughly 290% from market close on the day of its IPO in October 2018, and the company now has a market capitalization of roughly $2.6 billion and is valued at approximately 4.1 times this year's expected sales. The company is also profitable and trades at approximately 52.6 times this year's expected earnings. 

Niu expects to post year-over-year sales growth between 40% and 60% in the second quarter, so sales momentum still looks pretty strong in the near term, but charting performance further out could be tricky. Niu could post huge gains if the company continues to post strong sales in China and increases its market share in other territories, but investors should proceed with the understanding that the stock is still relatively high risk. 

Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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