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Home / Business / What Investors Need to Know About NIO's 20% Decline Wednesday Morning – The Motley Fool

What Investors Need to Know About NIO's 20% Decline Wednesday Morning – The Motley Fool



What happened?

Shares of NIO (NYSE: NIO) a Chinese electric vehicle manufacturer, plunged over 20% Wednesday morning after it released a disappointing fourth- Quarterly results, slowing demand, and canceled factory plans

So what

Fourth-quarter revenue checked in at 3.4 billion yuan, or $ 499.7 million, which topped analysts' estimates calling for $ 493 million, but the bottom-line loss is what shocked investors. NIO reported a loss of $ 0.49 per share, and much more than analysts' estimates of a $ 0.32 per share share. Deliveries of the ES8 totaled 7,980 during the fourth quarter, much improved from the 3,268 delivered during the third quarter, but management noted a slowdown in electric SUV demand during the early months of 201

9 that was "greater than anticipated." To make matters worse, after posting a wider-than-expected loss during the fourth quarter, management decided to scrap plans for a factory in Shanghai.

 A red NIO ES6 SUV parked

NIOs ES6 SUV. Image source: NIO

"We also expect deliveries in the second quarter of 2019 to reflect continued weakness as we await the results of the 2019 EV subsidy policy in China and improvement in the macro-economic conditions. On the positive side, we have witnessed strong interest in the ES6 from consumers and media, and particularly from referrals of existing ES8 owners, "said Louis T. Hsieh, NIO's chief financial officer, in a press release.

Now what

NIO's fourth quarter certainly Fall short of expectations, and the first half of 2019 is likely to be weak thanks to EV subsidy reductions in China and the seasonal slowdowns surrounding the Chinese New Year holiday. Despite the disappointing quarter, NIO is still well positioned in China to thrive as the government continues to push EVs as a solution to its pollution. If the ES6 is hit with consumers, the fourth quarter and a weak start to 2019 could be nothing more than a speed bump in the grand scheme. It is also worth noting that NIO stock is up to date in the spite of today's decline

Daniel Miller 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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