Analysis on Nio Stock Performance: Plunge in March with Hopes of Rebound Ahead
Why Nio stock fell so much
The Chinese EV maker expects volumes and margins to improve from the second quarter onward. Where will Nio (NYSE: NIO) stock find a bottom? That's the question investors in the electric vehicle (EV) stock must be asking right now. Shares plunged 21.7% in March, according to data provided by S&P Global Market Intelligence, and are now down 47% this year as of this writing.
Nio's challenging fourth-quarter performance
Nio kicked off March on a somber note when its fourth-quarter and full-year 2023 numbers failed to impress investors. Although fourth-quarter deliveries of 50,045 units were up 25% year over year, they fell 9.7% sequentially. For the full year, deliveries rose around 31% from 2022, but its gross margin slumped to only 5.5% from 10.4% in the previous year. Nio's net loss surged almost 44% to $2.9 billion in 2023.
- Reasons for the stock plunge: Global EV market slowdown, analysts cutting price targets, and delivery guidance reduction.
Why Nio stock could rebound
A guidance cut never goes down well with investors, but they might be reading too much into it in this case. January and February are seasonally weak months in China, so car sales are typically lower during the period. Chinese rival Li Auto also downgraded its first-quarter guidance for deliveries in March. On top of that, Nio was upgrading its models to a new platform in recent months, and that hit production and deliveries, too.
- Nio's positive outlook:
- Delivery improvements: Deliveries in March rose 14% year over year and were up almost 46% from February, pointing towards rebound potential.
- New models introduction: Launching new models in the coming months could drive sales higher and attract more customers.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.