- NIO gains 6% more on falling Treasury yields, soft NFP, cost saving plan.
- Nio CEO William Li says Nio will lay off about 10% of its workforce.
- Collateral investments will also be reduced as EV focuses on financial performance.
- US Nonfarm Payrolls fell to 150,000 in October, a print that, among other things, ensures that rate hikes are over.
nio (NIO) shares rose 6% to $8.26 on Friday afternoon after it said increased competition in China’s electric vehicle (EV) market had forced the Shanghai-based company to lay off 10% of its workforce and scale back some of its investments.
Shares of NIO broke above its 21-day simple moving average (SMA) as the automaker said it is considering spinning off some of its segments to streamline the business and save money.
The US stock market reacted favorably to October’s light Nonfarm Payrolls (NFP) report, which showed US employment growing at a slower pace, more in line with the soft landing narrative. The Fed is much less likely to raise interest rates with this news. This is the second day in a row that the S&P 500 and NASDAQ are up more than 1%.
In addition, U.S. Treasury yields have fallen, another benefit for stock prices. 2, 5, 10 and 30 years bonds all saw yields fall more than 2%, and the 5-year bond yield fell more than 3%.
Nio stock: CEO says company will focus on efficiency
Nio management seems to have come to terms with the fact that it is not the future EV leader in the Chinese market that it was once thought to be. Data from the China Passenger Car Association shows that for the year to September, the Nio ranked 9th among EV and hybrid sales in mainland China, with just over 2% market share.
APARTMENT and to a lesser extent Tesla (TSLA) are locking up more market share in 2023 as they engage in a hyper-competitive price war that hurts smaller players like Nio.
Bloomberg obtained a letter sent to employees on Friday explaining that the layoffs were necessary due to mounting profit losses and the company’s struggle with growth.
“This is a difficult but necessary decision against tough competition. We still have a gap between our overall performance and expectations,” CEO William Li said in a statement to Reuters. The CEO added that investments that will not have a real meaning ax would also be the company’s financial performance within three years.
Nio released October delivery figures on Wednesday, showing the EV company delivered 16,074 vehicles for the month, a 60% increase from a year earlier but only a 3% increase from September. With just 126,000 deliveries in 2023, Nio is a long way from its goal of delivering 250,000 vehicles at the start of the year.
In mid-October, Nio said it was considering selling through a reseller network in Europe rather than a direct sales model. There have been reports that the company is actively recruiting in Hungary, France, Switzerland, Austria and Italy.
Nio is an electric vehicle designer and manufacturer based in Shanghai, China. The company, formerly known as NextEV, changed its name to Nio in 2017. Nio trades under the symbol NIO on the New York Stock Exchange (NYSE) and under the symbol 9866 on the Hong Kong Stock Exchange. The company was founded in 2014 but went public on the NYSE in September 2020 with an initial public offering of $1.8 billion. William (Bin) Li is the CEO of Nio, which he co-founded with President Lihong Qin, another Chinese business executive.
The main difference from other major EV brands like Tesla is that the Nio offers battery swapping technology in addition to the usual charging options. These swap stations allow drivers to swap their batteries for fully charged, identical batteries in less than five minutes, allowing owners to drive long distances without having to stop for an hour to recharge like most other EVs. At the end of 2022, Nio had 1,305 battery exchange locations and built its first exchange station in Norway in May 2022. The goal for the customer is to reduce range concerns.
Nio began its reign with the EP9 sports car back in 2016, and the vehicle is still being produced on a small scale. Since then, Nio has split into more traditional tariffs. The ES8 was introduced in 2018. It is a full-size SUV with a range of 311 miles. The ES6 SUV dropped the following year and has a range of 379 miles. with versions capable of a range of 621 million, the ES7 and EC7 arrived in 2022 and 2023, respectively.
Yes. While the vast majority of Chinese automakers focus exclusively on the Chinese market, Nio began its foray into Europe at the end of 2021. After launching in Norway, Nio began entering the German, Danish, Dutch and Swedish markets in 2022, with plans to expand throughout the rest of the market . decade. Although not yet sold in the US, Nio vehicles are being tested in California as part of the state’s autonomous driving program.
Nio stock forecast
The market is happy that Nio is defining a new strategy, but Nio’s layoffs may not have much to do with it. Rivals XPeng ( XPEV ) and Li Auto ( LI ) saw their share prices rise on Friday despite offering no major new policy changes. A more likely reason is that the stock market is excited by US employment data and falling Treasury yields. As the value of the US dollar falls on the news, stock prices go up in compliment.
The more than 5% gain in Nio shares on Friday has a lot to do with it. NIO shares only rested on long-term support near $7.30 on Wednesday. Its break higher at the end of the week sent the stock price above the 21-day simple moving average (SMA).
Bulls now have their work cut out for them as the next area of resistance is more than 10% higher at $9.20. This level served as a double top on September 29 and October 11. From there, it’s a straight shot to the resistance band in the $10-$11.30 range. However, for this rally to continue, the 9-day SMA must break above its 21-day counterpart.
NIO Daily Chart