Why Nio Stock Slumped Today

All of a surprising, there seem like greater electric car companies to spend money on — or as a minimal more acquainted ones.

What occurred

Shares of Chinese language electric car firm Nio (NYSE:NIO) slipped 2.8% in 2: 25 p.m. ET shopping and selling Wednesday afternoon, joining in a multi-car firm pileup that cost Lucid Community (NASDAQ:LCID) bigger than 5% and sent Rivian Automotive (NASDAQ:RIVN) crashing 18% lower.

So what

There is one huge incompatibility among these three electric car shares, alternatively: Nio inventory has been “fluctuate-certain” for somewhat unheard of your whole previous month. In actual fact, for of us that examine the inventory’s mark right this moment to where it became exactly one month ago, Nio inventory is up only $0.01 in mark!

Compare that to Californian electric car firm Lucid Community, even though, whose inventory has roughly doubled over the final 30 days. And examine it to Rivian, which up till investors slammed on the brakes right this moment, hadn’t suffered a single shedding session since its inventory IPO’ed one week ago.

Red arrow going down crosses a green arrow going up.

Image source: Getty Pictures.

Now what

Now why would possibly possibly that be? I’m only speculating here, but think about:

Train you are an investor, and you think that electric car shares are the future — but you are inquisitive in regards to the probability of investing in a firm that has gargantuan seemingly, but no earnings at all.

For investors passe to pondering of shares with low P/E ratios as “cheap,” and excessive P/E ratios as “expensive,” and no P/E at all as “unsafe,” you are going to be particularly anxious about investing in a firm that no longer only has no P/E, but operates in a overseas market like China, where the authorities in most cases acts irrationally, and you’ve got puny insight into how issues are indubitably knowing for the firm on the ground.

All of a surprising, even though, no longer one but two light electric car companies — Lucid and Rivian — tear public gorgeous to your yard. They would per chance simply no longer believe earnings, obvious, but neither does Nio. And at the very least, they’re American companies. You perceive the SEC will seemingly be keeping tabs on their industrial for you, and making obvious their financial statements are on the stage. In a enticing in like this, would possibly possibly you maybe be inclined to lead clear of the seemingly riskier Nio inventory, and resolve the more acquainted Lucid and Rivian?

I suspect it’s seemingly you’ll per chance. And I suspect that would be why Lucid and Rivian shares believe been going up so unheard of right this moment, whereas Nio inventory has been stuck in neutral.

This article represents the knowing of the creator, who would possibly possibly simply disagree with the “official” advice enviornment of a Motley Fool top class advisory carrier. We’re motley! Questioning an investing thesis — even even handed one of our have — helps us all think seriously about investing and produce choices that wait on us turn out to be smarter, happier, and richer.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NIO Inc. The Motley Fool has a disclosure policy.”>

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