The stock market has kept investors on their toes all year, and Wednesday didn't look like it'd be any different. Signs of a potential early rally gave way to pessimism as the opening bell for the regular trading session approached. Market participants still seem concerned about economic pressures, especially with the Federal Reserve poised to make a key decision on interest rates at its next monetary policy meeting next week. As of shortly before 9 a.m. ET on Thursday morning, futures contracts on the Dow Jones Industrial Average (^DJI -0.86%), S&P 500 (^GSPC -0.25%), and Nasdaq Composite (^IXIC +0.24%) were all slightly negative, albeit having fallen less than a quarter-percent.
A couple of key stocks weighed on investor sentiment on Wednesday morning. The stock with the higher profile was Nio (NIO +0.88%), which reported its latest financial results and failed to deliver the unqualified positive performance that electric vehicle (EV) stock investors wanted to see. However, even larger declines came from the tech space, where UiPath (PATH +4.22%) wasn't able to satisfy its shareholders with its most recent quarterly report. Read on to learn more about both companies.
Nio loses power
Shares of Nio were down almost 5% in premarket trading early Wednesday, adding to losses from Tuesday's regular session. The Chinese EV manufacturer's results for the second quarter of 2022 failed to inspire the confidence that investors have grown used to in past years.
Nio shareholders had already been aware of the slowdown in vehicle deliveries that the company had experienced from April to June. Nio delivered just over 25,000 vehicles in the second quarter, with a healthy mix across four different models. The ES6 SUV remained the company's most popular model during the period, but the ET7 sedan saw sales of nearly 6,750 vehicles for the quarter. The delivery figure was up 14% year over year, but it marked a nearly 3% decrease sequentially from the first quarter of 2022.
NYSE: NIO
Key Data Points
What really shook investor confidence, though, was Nio's bottom-line performance. Nio lost $326 million on an adjusted basis during the quarter, which was a more than sixfold jump in red ink from the year-ago period and up 70% from just three months earlier. That worked out to $0.20 per share.
Moreover, the future could bring continued challenges for Nio. Founder/CEO William Bin Li pointed to the second half of 2022 as a critical period for Nio to scale up its latest new product line, with strong orders for its ES7 SUV and plans to start mass-producing its ET5 model later this month. Nio hopes to deliver between 31,000 and 33,000 vehicles in the third quarter and bring in 31% to 39% more revenue than in the year-earlier period, but shareholders seem skeptical and want proof before they'll take the company's word for it.
UiPath loses its footing
Meanwhile, shares of UiPath appeared headed to set a new all-time low. The robotic process automation specialist went public in mid-2021, but its fiscal second-quarter financial report for the period ending July 31 failed to inspire confidence despite the company reaching a key milestone.
Some of UiPath's growth metrics looked solid. Quarterly revenue climbed 24% to $242 million, and annualized recurring revenue climbed to a rate of $1.043 billion, topping the $1 billion mark for the first time and rising 44% year over year. Dollar-based net retention rates remained strong at 132%.
NYSE: PATH
Key Data Points
However, UiPath sees its growth rates potentially slowing sharply over time. For its full fiscal year, UiPath expects just $1.002 billion to $1.007 billion in revenue, with annualized recurring revenue of $1.153 billion to $1.158 billion. Moreover, shareholders can't expect the tech player to stop losing money, as UiPath is projecting adjusted operating losses at least for the remainder of the year.
In the long run, UiPath's software could be vital in helping its clients be more efficient. For now, though, investors aren't seeing UiPath's promise play out how they expected, and that's putting significant pressure on the stock.
