The market suffered another pump and another dump with the usual suspects. China-based Nio (NYSE:NIO) topped $10.50 or so ahead of its earnings report last week only to lose all of those gains. The company reported impressive percentage revenue growth but forecast a weak outlook ahead.
In January and February, ES8 deliveries were 1,805 and 811, respectively. Not only are the monthly declines troubling but they are also weak compared to December 2018 numbers. The company blamed accelerated year-end deliveries, ahead of the subsidy reductions in China in 2019.
The pent-up sales, ahead of Chinese New Year, led to weakness for the current quarter.
Speculators who got caught up in the hype for Nio stock, after its coverage on 60 Minutes, will not see a recovery in NIO shares any time soon.
Long-Term Growth
Investors with a long-term timeframe need not get concerned over the slowdown the company is currently experiencing. As long as the growth story holds, buying on the dip may pay off. After all, Tesla (NASDAQ:TSLA) stock once traded in the $20s and $30s before rocketing higher.
Nio’s gross margin improved and will keep getting better as costs fall thanks to economies of scale.
Your Takeaway
Nio is a speculation in the near-term. The stock corrected and erased the speculation priced in its shares. If U.S-China trade improve and Chinese demand for Nio recovers, the stock will respond by going up.
