What happened
Many Chinese growth stocks have been volatile in recent weeks as the country went from a restrictive "zero-COVID" policy to an abrupt reopening. Chinese electric vehicle (EV) maker Nio (NIO +5.50%) was one of those, taking some notable swings in value over the past couple of months.
The company's American depositary shares maintained that volatile behavior in Tuesday's trading session. After spiking by nearly 6% early, Nio stock slid briefly into the red, then recovered to a gain of 3.3% as of 3:30 p.m. ET. That latest rebound may be due to some recent EV sales data out of China.
NYSE: NIO
Key Data Points
So what
Tuesday's volatility is emblematic of the uncertainty investors are feeling about China's economic outlook. But whether the reopening will result in a positive trend in consumer spending remains to be seen.
Nio will need consumers to feel better about spending if it's going to recover some of the sales it presumably lost in recent months. Based on data just released by the China Passenger Car Association, spending on Nio's products may have resumed. The company had the second-highest sales of fully electric vehicles in the country last week.
Image source: Nio.
Now what
When Nio provided its third-quarter update in November, management said it anticipated sharply accelerating sales in the fourth quarter, representing more than 80% year-over-year growth at the midpoint of its forecast range. But toward the end of December, management slashed its estimate for quarterly deliveries by about 15%, due mainly to COVID-related impacts.
The company did, in fact, beat its lowered delivery forecasts for the fourth quarter, and that momentum looks to be carrying into January. Nio only trailed the much larger BYD in fully electric vehicle sales in the first full week of 2023. Nio delivered 122,486 electric cars in 2022, and another 2,818 in the first week of January. That represented revenue of nearly $183 million and put Nio in the No. 2 spot to start the year. Investors will look for that growth to continue. But if there are more setbacks in production volume, the stock will likely reverse course once again.
