Why NIO Stock Is Down By 13% Today

Key Insights

• NIO’s listing in Hong Kong triggers fears of delisting from U.S. markets.
• EV producers will have to deal with higher costs due to the recent rally in commodity markets.
• Stocks of unprofitable companies will likely remain under pressure in the near term. 

NIO Stock Retreats As The Company’s Shares Start Trading In Hong Kong

Shares of the Chinese electric vehicle maker NIO gained additional downside momentum after the company’s stock began to trade in Hong Kong.

The stock reached highs near the $67 level back at the beginning of 2021 but moved below the $20 level in 2022 on fears about the ongoing crackdown on tech companies in China and the risks of delisting due to worsening U.S. – China relations.

The listing in Hong Kong has clearly ignited fears of delisting from U.S. markets. Such risks have been recently highlighted by the trading action in U.S.- listed Russian stocks, which have been effectively frozen when the relations between Russia and the West hit new lows.

The current situation in commodity markets raises concerns about future profit margins of electric vehicle markets so many EV stocks, including Tesla, have been trending lower in recent weeks.

What’s Next For NIO Stock?

Analysts expect that NIO will report a loss of $0.24 per share in 2022, so the company is projected to remain unprofitable in the near term.

Analyst estimates have been mostly stable in recent weeks but they will likely start to trend lower due to recent developments in commodity markets.

The stock is hit by multiple risks, including caution towards unprofitable companies, delisting fears and the rally in commodity markets.

The company has already lost more than 40% of its market capitalization since the beginning of this year but it remains to be seen whether speculative traders will rush to buy NIO stock.

At this point, it looks that traders will wait for an upside trend in the market leader Tesla before buying other EV stocks.

For a look at all of today’s economic events, check out our economic calendar.