Electrical car (EV) producers have been within the information so much not too long ago, however sadly not for most of the proper causes. NIO (NYSE:NIO) endured a troublesome month, falling by 13%. There have been a few stand-out causes that I noticed contributing to the drop in NIO inventory.

Losses rising

The primary one was poor Q3 outcomes, which got here out within the second half of November. The report confirmed complete income of $2.66bn, a drop of two.1% from the identical quarter in 2023. As for the underside line, NIO misplaced $746.4m, which was greater than anticipated and a rise from each the loss posted final quarter and the loss from a yr in the past.

It’s true that the corporate is delivering extra autos. Through the quarter, it achieved a record-breaking supply of 61,855 good EVs. That is nice, however NIO nonetheless faces the issue of needing to enhance revenue margins to allow it to interrupt even and flip from posting losses to changing into worthwhile.

The outcomes couldn’t present a catalyst for the inventory to rally, leaving buyers considerably underwhelmed.

China commerce issues

One other issue that harm the inventory was the US Presidential election outcome. Donald Trump’s victory is seen as a troublesome one for relations with China, given his stance on tariffs and different buying and selling measures.

He has outlined that he intends so as to add an extra 10% tariff on Chinese language imports as one in all his first acts as President in January. We don’t know what is going to come after that, however it’s seemingly that corporations like NIO received’t be capable to penetrate the US market very nicely within the coming years.

In fact, NIO nonetheless has a big potential market in Asia, it doesn’t want the US with the intention to achieve success. However NIO is a inventory that’s listed in Asia but additionally within the US. So it’s simpler for US buyers to specific a adverse view on the entire scenario through NIO shares than another corporations that may not be listed on the US inventory market.

Looking for worth

Trying forward, we’ll have to attend till early 2025 to get extra monetary updates to see how the corporate is performing. With out a lot company-specific info, I anticipate the share price will proceed to maneuver decrease. In any case, it’s down 38% over the previous yr. In my expertise, when a inventory is trundling decrease over an extended time frame, it takes a transparent catalyst with the intention to spark a rally.

In fact, some buyers may think about it to be a price buy proper now. It’s troublesome to pin a good worth, provided that the corporate is loss-making. Nevertheless, some may assume that NIO will be capable to continue to grow market share in China and the remainder of Asia. If EV demand jumps within the coming yr and deliveries maintain rising, there’s the potential for it to make a revenue.