Market volatility can be scary, but every so often, you can almost tell that Wall Street is trying to take advantage of what could be the last few quiet days of summer. That seemed to be the case early Tuesday, as stock index futures for major market benchmarks suggested very small moves when the market opens. Overall, market participants are waiting to see whether the economy starts behaving better or if high interest rates end up producing the recession that so many have anticipated for such a long time.
It's easy for investors in the U.S. to focus only on domestic stocks, especially since so many U.S. companies do business around the world. However, a couple of stocks from China caught the attention of investors Tuesday morning. As you'll see below, Nio (NIO 8.72%) moved lower after reporting its latest financial results, but Pinduoduo parent PDD (PDD 2.80%) got a nice jump.
Nio has shareholders feeling a bit worried
Shares of Nio were down about 7% in premarket trading on Tuesday morning. The Chinese electric vehicle (EV) manufacturer reported second-quarter financial results that confirmed the high level of competition in China and raised concerns about Nio's position in the market.
Nio's quarterly numbers weren't all that strong. Vehicle deliveries in the second quarter fell 6% year over year to 23,520, and that figure was down 24% from the first quarter of 2023. Revenue from vehicle sales plunged 25% from year-ago levels to $991 million, and total revenue dropped 15% year over year to $1.21 billion. Net losses widened substantially from the year-ago period, with adjusted losses weighing in at $751 million.
Nio tried to look to the future. The automaker noted that its product transition to a new platform should help support a rise in vehicle deliveries in the second half of 2023. Indeed, Nio pointed out that July vehicle delivery numbers more than doubled from July 2022 to 20,462 vehicles.
Nio is focusing its attention on the high-end premium EV market in China, and that's arguably the part of the market that's most susceptible to economic pressure. With efforts in China to stimulate the economy having thus far had limited impact, it's unclear whether vehicle buyers will have the confidence to spend up for the luxury vehicles that Nio wants to sell.
PDD is A-OK
Moving the other direction, shares of PDD jumped 12% in the premarket session Tuesday morning. The e-commerce specialist reported second-quarter financial results that made shareholders a lot more confident in the company's future, even amid economic challenges in China.
PDD's numbers didn't show signs of any slowdown. Revenue of $7.21 billion was up 66% from year-ago levels. Operating profit was higher by 39% year over year on an adjusted basis, and adjusted net income climbed to $2.11 billion, 42% above the second quarter of 2022.
PDD executives said they've seen a positive shift in consumer sentiment over the past quarter, and that's helped to bolster demand for key product lines. By investing in technology to bring buyers and sellers together more efficiently, PDD believes that its growth story remains intact and that the company has a bright future ahead.
As COVID-related restrictions lifted in the U.S., many retailers saw dramatic declines in online activity. Yet with China having eliminated restrictions more recently, PDD's numbers suggest that shoppers haven't stopped using its tools to make purchases. That bodes well for PDD in the years to come.
