Nio (HK: 9866) (NYSE: NIO) dropped 5.6% at the end of last week in Hong Kong, rose 0.56% in New York on the same day. No, this does not now mean that there's an arbitrage on NIO between the two markets. Rather, this is the effect of time over the day. But it does show that there's considerable confusion about where Nio really ought to be at present if we're getting swings like that as the open market moves through geography, times zones and the time of day.
The problem seems to be in deciding whether to view Nio on a sectoral basis - just as part of the EV revolution - or as an individual company competing within that EV sector. For the sector is doing just fine, Nio as an individual company not so well. This showing us one of those stock market lessons - a rising tide doesn't necessarily raise all boats. Sometimes, at least, we need to think about the competition between companies in the same sector, at others it's the performance of the whole and entire sector or new industry that counts.
Nio share price from Hong Kong Stock Exchange
The particular concern here is over EV sales into the Chinese market. The week opened with Nio reporting the quarter's sales, which were just above 31,000. That's 20% up on the year previously, but also down from the 40k of the previous quarter. It's not just that shrinking sales is not what is being looked for, less than stellar growth here is also a contraindication. The market is expanding rapidly, so therefore so should sales at an individual supplier.
There's also that more China specific point. Tesla sales in China were just shy of 89,000 in March, that's 20% growth just since February. 20% YonY pales in comparison to that. BYD sold 200k vehicles, a near 100% rise YonY.
The point is that given the market growth as a whole then why is Nio seeing such slow growth? Is it just some passing phase? Or have those other producers managed to do something Nio cannot? That is, will Nio grow in the future at the sector rate, or is it being outcompeted by others within the sector?
As no one really knows the answer and as opinions on what that answer is going to be rapidly change we're seeing this volatility in NIO stock - even over the same day.
