Shares of Nio (NYSE:NIO) stock are taking a tumble today, which may be attributable to the release of new Chinese manufacturing data that showed contraction instead of expansion. According to the National Bureau of Statistics, China’s Purchasing Managers’ Index (PMI) figure tallied at 49.5 in October compared to the average estimate of 50.2 and the low estimate of 49.9. China’s PMI tallied in at 50.2 during September. October’s PMI, coming in below the pivotal 50-point level, is significant because it is the level between contraction and expansion.
Still, some sectors, in particular, may have dragged down the PMI figure. “The weak PMI data may reflect some of the weakness in demand related to the housing slump and a slowdown in infrastructure spending,” said Economist Intelligence Unit senior economist Xu Tianchen.
China’s Economic Woes Are Dragging Down NIO Stock
According to other economists, the disappointing PMI figure is more related to an adjustment to supply rather than a slowdown in demand. “In October, we saw a wider effort in the industrial sector to cut supply to cope with a profit squeeze,” said Hang Seng Bank China chief economist Dan Wang.
Overall, this macroeconomic data does not benefit Nio, but at the same time, it isn’t completely indicative of the electric vehicle (EV) company’s business prospects. During September, Nio delivered 15,641 vehicles, showing year-over-year (YOY) growth of 43.8%. For the entire third quarter, deliveries tallied in at 55,432 vehicles, up by 75.4% YOY. In the past, Nio has announced monthly deliveries on the first of each month, so shareholders should expect an October delivery update tomorrow, Nov. 1.
Chinese insurance registrations can give investors a sneak peek at deliveries. From Oct. 1 to Oct. 29, Nio’s registrations totaled 14,100. That fell short of Li Auto (NASDAQ:LI) and XPeng’s (NYSE:XPEV) comparative figures of 36,800 and 15,200 registrations, respectively.
Meanwhile, Nio has not yet confirmed when it will report its third-quarter earnings, although the announcement should be made in the coming weeks if not days. Analysts are expecting revenue of $2.664 billion, implying YOY growth of 49.23% and an adjusted EPS loss of 36 cents.
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.
