What happened
Stocks of Chinese electric vehicle (EV) makers have been under pressure recently as expectations about their sales have dropped. Nio (NIO -0.48%) lowered its fourth-quarter delivery estimates by about 15% in a late-December update as Chinese government restrictions meant to slow the spread of COVID-19 impacted supply chains, demand, and production.
Image source: Nio.
But investors initially cheered Tuesday morning after Nio reported December deliveries that pushed the company past those lowered expectations. The stock price jumped by nearly 8% on the first trading day of 2023. It couldn't hold those gains, however, as the overall direction of the market turned negative. As of 1 p.m. ET, Nio shares were down by 2.1%.
So what
Nio said in a Dec. 27 update that it expected to ship between 38,500 to 39,500 vehicles in the fourth quarter. While that still would have been a record, it was also a reduction from a prior projection of between 43,000 and 48,000 vehicles, and the stock has dropped 12% since that day.
The change was due to a rising new wave of COVID-19 in China that disrupted suppliers and hurt consumer demand for automobiles in several Chinese cities. But on Jan. 1, the company reported that it made a record 15,815 deliveries in December, resulting in a total of 40,052 vehicles shipped in the fourth quarter, exceeding its reduced expectations.
Now what
Investors were relieved to see Nio achieve new monthly and quarterly records. But headwinds remain, and with shares of EV leader Tesla selling off Tuesday partly due to lower-than-expected vehicle deliveries, Nio's early gains vanished. For those with a long investment time horizon, though, that drop could provide a good chance to pick up some shares of this growing company.
