What happened
Nio (NIO -6.75%) hit the low end of its guidance range for first-quarter deliveries, but the stock is tanking today anyway. Nio’s American depositary shares dropped as much as 8% and remained lower by 6.5% at 12:30 p.m. ET.
So what
One reason for the reaction is likely the fact that Nio shares had soared nearly 20% over the past week. Nio delivered 31,041 of its electric vehicles (EVs) in the first quarter, which was at the low end of the range it projected one month ago.
While it technically hit its estimated range, deliveries in the first quarter were still down from the 40,052 vehicles it delivered in the prior quarter. Meeting guidance just wasn’t quite enough for investors after the recent run-up in the stock leading up to the report.
Now what
One bit of positive news for investors was that Nio delivered 20.5% more electric cars in the first quarter than it did in the prior-year period. That represents the continued steady growth that Nio investors want to see in the Chinese EV market. The company also plans to keep differentiating itself with its technology.
Last week the company said it launched its third-generation battery swap station in its home market. Customers can buy a monthly subscription for battery replacements that take just minutes to complete at one of its more than 1,300 power swap stations. That subscription reduces the initial purchase price of Nio’s vehicles. The company also has thousands of charging stations for customers who don’t want to participate in the subscription program. Nio said it plans to install another 1,000 battery swap stations this year.
Nio shares haven’t changed much year to date. First-quarter deliveries did not turn out to be a catalyst to change that. The company will need to report record growth sequentially in the upcoming quarters for investors to move the stock higher. With the Chinese market continuing to grow, anything less would be a big disappointment.