American depository receipts (ADRs) in Chinese electric vehicle (EV) maker Nio (NYSE:NIO) continued to fall as China’s economic problems continued to pile up.
Nio fell 3.5% on Jan. 19 and another 4% over the weekend. The weekend fall was in line with that of China’s Shenzhen Component Index. The Shenzhen market is sometimes compared to the Nasdaq.
Nio’s market capitalization is now below $13 billion. Based on current exchange rates, the company had estimated 2023 revenue of $6.7 billion.
Nio Troubles
All the Chinese EV stocks traded in New York have been down since the start of the year. Like Nio, XPeng (NASDAQ:XPEV) is down by about 33%. Li Auto (NASDAQ:LI), which makes hybrid cars, is down by almost 25%.
Nio has sought to fight the fall with marketing gimmicks, like a viral video showcasing its ES8 car. The company has also launched a battery-sharing initiative ahead of the Chinese New Year. The holiday starts on Feb. 10.
The battery swaps have been a Nio calling card since it was focusing on Millennial-age “Young Emperors” in the last decade. That market collapsed with the Covid-19 pandemic. Nio needed a government-directed bailout to stay in business. It’s now reversing those government ties with help from Abu Dhabi’s Public Investment Fund.
At Stocktwits, sentiment on Nio is generally bearish, with bulls focusing on the launch of its low-priced Alps line.
NIO Stock: What Happens Now?
The problems with Nio’s stock are not Nio’s to solve. They’re China’s. So long as the Chinese stock market stays down, so will Nio stock.
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.
