Shares of Nio (NYSE:NIO) stock are sliding lower today, although the decline isn’t due to any company-specific news. In fact, shares of the electric vehicle (EV) company are falling due to general weakness in the Chinese market.
Today, the CSI 300 Index, China’s mainland benchmark, closed lower by 1.3%, marking the lowest price level since February 2019. The index has yet to close in the green in 2024 and is now down by about 4% this year. Additionally, the index has been in a downtrend since February 2021.
Macroeconomic factors can affect a stock just as much as company fundamentals, and that has certainly held true for Chinese stocks in recent years.
Why Is NIO Stock Down Today?
Investors of all kinds have tried to time the bottom in Chinese stocks to no avail. Even the professionals have slipped up.
During the second quarter of 2024, total institutional ownership of NIO stock tallied in at 478.91 million shares, up by 1.17% quarter-over-quarter (QOQ). However, NIO fell by about 10% from Q2 to Q3, which resulted in total institutional ownership declining by a significant 14.95% QOQ as of the end of the third quarter to 407.32 million shares.
Meanwhile, Nio has been steadily growing. The company delivered 50,045 vehicles during the three months ended Dec. 31, up by 25% YOY. For 2023, deliveries totaled totaled 160,038 vehicles, up by 30.7% YOY.
At the same time, it isn’t just the Chinese economy hurting the EV company. Profitability remains a key issue and isn’t expected for several years. Analysts have forecasted that Nio will become profitable on a full-year basis in 2026 with a GAAP EPS of 26 cents. GAAP EPS for 2024 is expected to be a loss of 86 cents for 2024 and a loss of 45 cents in 2025.
Nio hasn’t yet announced a date for its fourth-quarter earnings, although an announcement should be made in the coming weeks. Analysts have forecasted revenue of $2.357 billion, reflecting yearly growth of 4.89%, a steep decline from Q3’s growth of 46.64%. GAAP EPS is expected to be a loss of 30 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.
