Nio (NYSE:NIO) and other Chinese electric vehicle (EV) shares are bouncing, but mostly down. NIO stock dropped 12.5% on Nov. 9 as investors anticipated bad earnings, then recovered as much as 13% today when they were not as bad as anticipated.
Nio lost $578 million for the September quarter after delivering 31,607 cars worth $1.68 billion, the latter figure up 38% from a year ago. The loss from operations came to $544 million.
Over the last month, Nio has lost one-quarter of its market cap, as has Xpeng (NYSE:XPEV). Li Auto (NASDAQ:LI) is down 10%. NIO stock opened today at about $10.30 with a market capitalization of $17.5 billion.
It’s Not Just Nio
All car manufacturers are down this year, just not as much as tech stocks. EV stocks, which have been trading like tech stocks, are thus down more.
Tesla (NASDAQ:TSLA), the industry leader, is now worth less than $600 billion. That’s still more than 10 times the value of General Motors (NYSE:GM), which is down 38% in 2022. But Tesla is down 56%, and from a much higher base.
The same is true for Nio, only more so. Nio is now down 70% on the year. Li Auto is down by half, and XPeng has fallen by a whopping 87%.
The Chinese currency isn’t helping. The yuan now trades at 7.2 to the U.S. dollar against 6.4 a year ago. That means Nio’s 2022 sales are worth 13% less than its 2021 sales, when measured in dollars.
Analysts are following the short-term bounces rather than these long-term trends. Headlines about Nio “bouncing back” after dropping make it seem like momentum has shifted. It hasn’t.
Fundamentals like growing competition and the possibility of more Covid-related lockdowns are still in place. As I wrote in March, Nio is also making luxury sedans while its home market is turning toward small, utilitarian vehicles from companies like BYD (OTCMKTS:BYDDF).
What Happens Next for NIO Stock?
Until economic fundamentals change, with the yuan rising and its economy growing, it’s hard to see Nio or its main competitors’ stock rising either.
But if China does turn around, which Nio management now expects, NIO stock may rise faster than comparable American stocks amid currency tailwinds.
On the date of publication, Dana Blankenhorn 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.
