What happened
Shares of Chinese electric-vehicle (EV) maker Nio (NIO +3.77%) were trading lower again on Tuesday morning, as investors continued to sell down volatile growth stocks while awaiting results of the Federal Reserve Bank Open Market Committee (FOMC) meeting.
As of 10:45 a.m. ET today, Nio's American depositary shares were down about 4.1% from Monday's closing price.
So what
Nio's recent share-price decline doesn't seem to be about the business itself. While the company gave up some market share to domestic rivals in 2021, it seems well poised to recover (and then some) with three new models and some new technologies due to launch in 2022. Nio confirmed last week that the first of those three new models, the upscale ET7 sedan, is on track to launch in March.
Nio's next new model, the technology-packed ET7 sedan, will also be its new flagship. Nio confirmed last week that ET7 deliveries to reservation holders will begin in March. Image source: Nio.
I think the recent sell-down in Nio's shares is more about American investors' needs and concerns. Specifically, with inflation high and interest rates nearly certain to rise soon in response, I think investors are reducing their exposure to high-flying growth stocks -- a category that has certainly described Nio's stock over the last couple of years.
The FOMC meeting will conclude on Wednesday. I expect that Fed chairman Jerome Powell will provide some guidance around the timing and likelihood of interest rate increases shortly thereafter. (I also expect, as do most analysts, that the Fed will begin raising interest rates in March.)
To be clear, there was no negative Nio-specific news pushing the stock lower on Tuesday morning. So why is it down today? I think the answer is, "Because U.S. investors are worried."
Now what
EV investors won't have to wait too long for an update from CEO William Bin Li and his team. The company hasn't yet announced a date for its fourth-quarter earnings report, but past practice suggests that we can expect it in mid to late February.
