It took just a single negative opinion from a Wall Street expert to bring down stocks of China's electric car manufacturer NIO late Monday, as the company struggles to make ends meet.
The influential analyst said NIO could lose all its money in the coming weeks if it fails to open up more stores to help lift up its profits. The company's US depositary stocks have plunged nearly 11 percent from its closing price, Friday.
Shares of Nio Inc. (NIO) collapsed toward a record low during after-hours session Monday, despite a US Treasury Department official's denial of a report it was looking into blocking Chinese firms from listing in the American stock exchanges. NIO's volume hit 48 million shares, just enough to make it into NYSE's most actively traded stocks for the day, but that's all it could muster.
The stock has now lost 50 percent of its value after losing seven straight sessions in the past days, marked by a 20 percent decline in the wake of its second-quarter results, in which losses grew, sales plummeted and the carmaker announced it fired more than 2,000 workers by end of the current quarter.
While shares of other US-listed Chinese firms were up late Monday following the denial of those plans, NIO's stock continued to dive 77 percent year to date, while stocks of US-based competitor Tesla Inc. has shed around 26 percent and the S&P 500 SPX, has rallied 18 percent.
China's auto industry has been weaker than estimated this year. Car sales from the mainland remained in the red for 14 straight months, and based on a recent analysis by a top official of the China Association of Automobile Manufacturers, auto sales in the next two or three years will not be as rosy as trades would expect.
In the past months, NIO has shut down an office in Silicon Valley in California, bailed on a plan to erect its own facility, and recalled around 5,000 ES-8 vehicles due to a fire hazard. The company has also stopped production of its ET Preview electric sedan just months after it launched it.
While NIO could not seem to get a good grip on the ball in every possession, rival Tesla is aggressively inching closer to unveiling its own Chinese Gigafactory.
Meanwhile, market observers believe that NIO's most likely choice at the moment is either a possible bailout by major stockholder Tencent Holdings, or the Chinese government or, worse, it could go bankrupt.
