NIO Stock: 2 Reasons Red-Hot Nio Is Moving in Reverse Today


Today, investors in Nio (NYSE:NIO) and NIO stock are seeing red once again. Shares are down more than 5% at the time of writing as investors continue to digest the Chinese EV maker’s prospects.

Nio (NIO) electric vehicle model in a soft blue color

Source: xiaorui /

Many investors are already aware of the myriad of issues plaguing this stock of late. The company’s been hit with deteriorating U.S.-China relations, and more recently, delisting threats. The global chip shortage affecting all EV stocks is still at play, providing additional downside momentum in recent weeks.

However, today, a couple of additional headwinds materialized. Let’s dive into what’s driving NIO stock lower today.

BYD, Competitors Threatening NIO Stock

On Tuesday, Warren Buffett-backed Chinese Automaker BYD Company (OTCMKTS:BYDDF) announced it had delivered more than twice as many electric cars as Nio in March.

The race to capture market share in the fast-growing Chinese market is on. And right now, it appears Nio is losing ground to competitors.

Nio’s March deliveries of 7,257 cars did beat analyst expectations. However, Nio isn’t the only game in town, and investors seem to be assessing how the market share of each competitor will ultimately shape up.

BYD and Xpeng (NYSE:XPEV) combined to produce roughly three times as many cars as Nio. An approximate 25% market share compared to its top two competitors isn’t bad, but it isn’t great either. Accordingly, it appears the jury’s still out on which company will be the longer-term market leader in China.

Q2 Production Headwinds an Issue

Recent comments by Nio’s founder and CEO William Li have provided another cause for concern for investors in NIO stock.

This time, the issue is once again with a global chip shortage. Li said:

“We still face difficulties in achieving our production goal — the issue (of chip shortage) remains tough in the second quarter, but it will affect our production only in the near term.”

Concerns are that the global chip shortage could result in Nio missing its production targets. Given how much growth is priced into EV stocks, that’s not a good thing. The company’s target of assembling 7,500 cars in Q2 appears to be at risk, and investors are pricing this risk into NIO stock today.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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