Cenntro Electric (NASDAQ:CENN) stock is down nearly 15% today after the electric vehicle maker posted its latest earnings.
Cenntro Electric reported its first financial results since June 2021 when Naked Brand acquired the company.
While the results were better than expected, investors appear to have been spooked by comments made by its CEO concerning the company’s supply chain issues and operations in China. Prior to today, CENN stock had declined 65% year to date to trade at $1.88 a share.
What Happened With CENN Stock
Cenntro Electric issued earnings covering the full year of 2021. The electric vehicle startup reported that it sold 918 commercial vehicles during the period, an increase of nearly 30% from the 707 vehicles it sold in 2020. Revenue totaled $8.6 million, an increase of 57% from $5.5 million in 2020. Cenntro also announced that it had $261.1 million of cash on its books as of December 31, 2021, compared with just $4.5 million at the end of 2020.
While the results were largely positive, Cenntro CEO Peter Wang made some comments during a conference call with analysts and investors that has led to the selloff in CENN stock today.
Specifically, Wang took a cautious tone when highlighting several risks facing the company in coming quarters. Those risks include continued supply chain problems, manufacturing issues within China, and problems moving inventory around the world.
“We, like almost all other EV companies, are concerned with the challenges in the global supply chain and in shipping sectors,” Wang said during the conference call. “While we believe we can navigate these challenges, we continue to exercise a strong degree of caution and continue to incorporate localization into our supply chain.”
Why It Matters
The comments by Wang highlight the ongoing troubles impacting both established automakers and startup companies such as Cenntro Electric. The negative reaction to Wang’s comments highlight the ongoing volatility in the market and the skittishness of investors who are quick to sell stocks at the first sign of trouble.
The cautious note also obscured what were otherwise solid financial results. Wang added that “chip supply chain and battery bottlenecks” are the “primary” problems facing the company right now. These have been exacerbated by the company’s reliance on suppliers in China, where a new Covid-19 outbreak has resulted in the shuttering of multiple manufacturing plants. Those comments did not inspire confidence in investors either.
What’s Next for Cenntro Electric
Already down 65% this year, CENN stock looks likely to fall further today. While the company’s financial performance did improve in 2021, investors may now lack confidence that the strong performance can continue given the many headwinds the company currently faces.
Until the pressures on Cenntro Electric ease, the selloff in its stock can be expected to continue.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
