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Nio Inc – ADR (NYSE: NIO) made gains on Wednesday after falling sharply in the past two sessions.
The weakness was not specific to the company, the three Chinese electric vehicle manufacturers listed in the United States – Nio, Xpeng Inc – ADR (NYSE: XPEV) and Li Auto Inc. (NASDAQ: LI) – retirement in unison.
Chinese EV stocks on a volatile rise: The trio saw intraday weakness on Friday following reports of a Chinese regulatory crackdown on domestic electric vehicle makers.
Nio and Xpeng made up for the losses and ended with gains.
The sale resumed on Monday as traders took profits after a rally in all three stocks. Nio has been in tears since the middle of the year as the company started to turn the corner after a COVID-19-induced slowdown.
For the cumulative time of the year, Nio is up 1,020%. Xpeng, which debuted on the Nasdaq on August 27, has gained around 150% and Li Auto has gained around 110% since its listing on July 30.
Sales have not eased even following VE delivery figures in November.
Nio deliveries more than doubled in November, marking the automaker’s fourth consecutive month of record numbers.
Nio plunged about 33% from its Nov. 24 highs of $ 57.20 to an intraday low of $ 38.43 reached on Wednesday.
Equities have since recovered well. Xpeng saw its shares slide from a record high of $ 74.40 reached on November 24 to $ 46.02 on Wednesday, a decline of about 38%.
From a record high of $ 47.70 reached on November 24, shares of Li Auto fell to a low of $ 30.95 on Wednesday, resulting in a high-to-low change of around 35%.
Related Link: Nio Analyst Sees Significant Favorable Winds For EV Brand Sales Volume
Is the withdrawal a concern? The strong rally in equities has polarized Wall Street, with some observing fundamentals and prospects supporting heady valuations. Others say irrational exuberance has pushed stocks to unsustainable levels.
Valuations have soared, warranting a good pullback, Deutsche Bank analyst Edison Yu said in a tweet.
The analyst also blamed the weakness on funds exiting these stocks and Tesla Inc (NASDAQ: TSLA) prior to its inclusion in S&P – as well as the wave of EV-related PSPC stock offerings.
The follow-up offer announced by Li Auto may also have served as a negative catalyst, the analyst said.
The penetration of Chinese new energy vehicles will increase to 20% in 2025, 53% in 2035 and 80% in 2050, according to Goldman Sachs analyst Fei Fang.
The demand for units will likely quadruple in the next four years, from 1 million units to 4.3 million units, he said.
Nio shares rose 5.45% to $ 47.98 at the close on Wednesday, while Xpeng was 7.38% higher at $ 56. Li Auto was down 0.32% to $ 34.75.
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Photo courtesy of Nio.
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