Why Is Nio (NIO) Stock Down Again Today?

Advertisement

Shares of Nio (NYSE:NIO) are down about 2% on seemingly no company-specific news. Making matters worse, NIO stock is now down approximately 40% year to date.

Image of Nio (NIO) logo branded on the exterior of a corporate building.
Source: Sundry Photography / Shutterstock.com

Delisting fears for Chinese stocks on U.S. exchanges continue, exasperated by DiDi Global’s (NYSE:DIDI) plans to delist from the New York Stock Exchange (NYSE). The company announced that it plans to delist from the NYSE, pending shareholder approval.

Shareholders will vote on the matter at a meeting on May 23.

Why Is NIO Stock Down Today?

Delisting fears most accurately explain Nio’s decline today. However, the Chinese Securities and Regulatory Commission (CSRC) explained in a statement over the weekend that DiDi’s case would not factor into talks with the U.S. on audit access. Earlier this month, the CSRC announced that it was “drafting a framework” to allow the more than 200 Chinese companies trading on U.S. exchanges to stay listed. To do this, the CSRC would have to supply U.S. regulators with audited filings from each company. In addition, the CSRC also explained that some companies may be delisted because they hold sensitive data.

Chinese companies must submit audited filings to U.S. regulators due to the Holding Foreign Companies Accountable Act (HFCAA). The HFCAA stipulates that foreign companies may be delisted if audited filings are not received by U.S. regulators for three consecutive years. The “clock” for the HFCAA began in 2021; therefore, the earliest companies may be delisted as a result of the legislation is 2024.

What’s Next for Nio?

Nio announced that it is gradually resuming production of its electric vehicles (EVs) after suspending production earlier this month due to rising Covid-19 cases. The EV maker also announced that it would be hiking prices for EVs starting this May. The price hike will affect its three SUVs, the ES6, EC6 and ES8, and raise prices by $1,572 for each vehicle. Nio attributed the price hike to increased raw material costs, especially batteries. CEO William Li commented that:

“Originally [we] thought we could bear it, but now with this pandemic it’s even harder to bear. We have no alternative but to raise prices. Please be understanding.”

Nio isn’t alone in experiencing increased raw material costs. Chinese EV competitors Li Auto (NASDAQ:LI) and Xpeng (NYSE:XPEV) recently reported price hikes as well.

On the date of publication, Eddie Pan did not hold (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.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/why-is-nio-nio-stock-down-again-today/.

©2024 InvestorPlace Media, LLC