Shares in electric vehicle (EV) maker Nio (NYSE:NIO) stock fell after China’s economic growth missed expectations.
The Chinese economy grew 5.2%, against a forecast of 5.3%. Retail sales growth also disappointed. The government said the youth unemployment rate was 14.9%, while unemployment in the nation’s cities was 5.1%.
Nio was trading at $6.55 per share in the pre-market this morning. Its market capitalization fell to about $13.7 billion on an estimated 2023 revenue of $6.8 billion.
China Slowing, Not Stopping
While growth of 5.3% would be welcome in most economies, it fails to live up to Chinese expectations.
Chinese Premier Li Qiang revealed the numbers at the Davos Conference in Switzerland, a meeting of banking and business leaders.
China’s population has also begun to decline, and the birth rate fell to 6.39 births for every 1,000 people. The country has renounced its old “one child” policy. However, economic weakness and a significant gender imbalance make it hard to turn around. There are almost 110 men for every 100 women in China.
Nio is launching an export drive, and fellow InvestorPlace contributor David Moadel has called it a buy. The company has become known for its “battery swap” technology, which can maintain an EV’s range in as little as five minutes.
Once called the “Tesla of China,” Nio needed a government-directed bailout during the Covid-19 pandemic. Since then, it has gotten a $2.2 billion investment from a unit of Abu Dhabi’s government and launched plans for a dealer network in Europe.
While Nio was originally known for high-priced performance cars, its coming Firefly and Alps lines will have prices of $25,000-$30,000.
NIO Stock: What Happens Next?
After this morning’s bell, NIO stock is down about 5% and 25% for the month.
NIO stock now sells for barely twice the company’s annual revenue, but continuing losses are a problem. Everything depends on the success of Firefly and Alps, but it has adequate capital to get them to market.
As of this writing, 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.
