Stock in NIO, the Chinese electric carmaker, fell 18% after the company reported a trifecta of bad news — a $1.4B loss, a 50% drop in revenue, and canceled plans to build its own factory.
Often called “the Tesla killer” by starry-eyed investors, NIO has struggled to kick its business into high gear since it went public last September.
A rapid deceleration
The Chinese electric carmaker’s financial performance since its September IPO has been anything but electric. NIO remains unprofitable, and although its stock price has remained stable, it could fall later this month when that period ends.
Yet, NIO’s long-term plans are also unraveling. NIO justified its losses with plans for its own factory (to wean itself off the state-owned manufacturing facility).
But now, NIO has canceled plans for the plant — saving money in the short term but self-sabotaging in the long term.
Hype is not a renewable fuel source
NIO filed for its $1.8B US IPO after selling just 481 cars, running on a tank full of investor excitement about China’s untapped electric vehicle market.
For a while, NIO drove right through its stock price potholes: 2 weeks ago, commentators called NIO the “Tesla killer” on 60 Minutes. But NIO’s tank is now nearly as empty as its promises.
But NIO’s not the only electric carmaker having a bad week: Tesla is also doing a digital skid after eliminating its physical stores and using 25% of its remaining cash to pay off a loan last week.