Why NIO Stock Is Trading Lower Today

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© Provided by The Motley Fool Why NIO Stock Is Trading Lower Today

What happened

Shares of Chinese electric-vehicle maker NIO (NYSE: NIO) were trading lower on Wednesday, following a third-quarter earnings report that, while upbeat, contained no big upside surprises.

As of 10:45 a.m. EST today, NIO’s American depositary shares were down about 5.7% from Tuesday’s closing price.

So what

NIO reported its third-quarter results after the market closed on Tuesday, and they were good. The company’s net loss of $154.2 million, or $0.14 per share, was narrower than the $0.17 per-share loss that Wall Street analysts had expected, and its revenue of $666.6 million also beat analysts’ expectations. 

© NIO NIO posted its best-ever deliveries total in the third quarter and a smaller-than-expected loss. But investors hoping for a big surprise were disappointed.

NIO also had good news to report on costs. They were down, thanks to an ongoing companywide cost-control campaign, lower commodity prices, and better economies of scale on higher production. That helped NIO’s gross margin expand to 12.9% in the quarter, versus 8.4% in the second quarter of 2020 and negative 12.1% in the year-ago period

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So why was NIO’s stock trading down on Wednesday morning? I think it’s as simple as this: While NIO’s earnings report was solid and its guidance was good, there were no big announcements. Traders who bought the stock hoping for a big pop after earnings were disappointed, and that might account for most of the selling.

Now what

NIO’s guidance for the fourth quarter was also good. The company said that auto investors should expect deliveries to rise to between 16,500 and 17,000 vehicles in the fourth quarter, from 12,206 in the third quarter. Revenue will likewise increase, it said, to between $922 million and $948 million. 

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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