What happened
Nio (NIO 1.11%) hasn't reported its second-quarter earnings yet, but the stock is taking a hit today after a competitor did. Nio shares dropped as much as 4% today, before paring those losses. As of 2:45 p.m. ET on Tuesday, the stock was still down 2.3%.
So what
Li Auto spooked investors in Chinese electric-vehicle (EV) makers after it said yesterday that second-quarter deliveries rose 63% year over year, but didn't offer a promising third-quarter outlook. More pessimism was added yesterday, too, when China cut interest rates after the world's second-largest economy experienced slowing in July.
Now what
Li Auto delivered more than 10,400 of its Li One EVs in July. But it told investors it projects only between 27,000 and 29,000 vehicle deliveries for the third quarter. That would represent a year-over-year increase of between just 7.5% and 15.5%, and is far below the 39,000 analysts expected. Investors believe that could translate into a similarly disappointing outlook from Nio when it reports its second-quarter results.
China's economy is also possibly showing the consequences of several off-and-on shutdowns with its "zero COVID" policy. Authorities cut interest rates Monday after July data showed economic activity is slowing across the board in the country. The disappointing data included factory output as well as consumer spending and real estate.
NYSE: NIO
Key Data Points
At the same time, Nio continues to increase its exports to Europe. The company plans to begin deliveries of its flagship luxury ET7 sedan into Germany later this year. A recent report including a video of a fleet of them staged at a Chinese port for export was shared by industry watcher InsideEVs over the weekend.
Investors need to do their own research and consider risk tolerance, but if short-term production woes from prior shutdowns have the stock down, it may be a good time to make an investment, considering Nio still appears to be moving forward with its overseas growth.
