Why Nio Stock Plunged 38.7% in October but Is Bouncing Back
In a display of nerve-wracking volatility, Nio (NYSE: NIO) stock lost a staggering 38.7% in value in the month of October but has already rebounded 14.7% since then, despite today's drop as of this writing, according to data provided by S&P Global Market Intelligence. October was, in fact, the harshest month for the electric vehicle (EV) stock so far in 2022, but much to investors' relief, Nio shares are swiftly bouncing back. What should investors make of this wild ride with Nio?
Investors in Nio were already nervous after the EV maker's second-quarter numbers, released in September, attracted multiple analyst downgrades. Although Nio's second-quarter revenue grew 21% year over year, its vehicle and gross margins slumped on rising input costs. Consequently, the company posted a huge net loss for the second quarter that far exceeded consensus estimates.
Although Nio projected strong growth for the rest of the year, it failed to allay investors' fears as macroeconomic headwinds and fears of a recession deepened. Inflation in the U.S. continued to rise rapidly, and Nio's primary and largest market, China, found itself in the grip of fresh coronavirus cases that triggered another round of lockdowns. Nio suspended operations at two plants in Hefei, Anhui province, and a recent Bloomberg report has estimated Nio to have lost production worth 7,000 EVs and deliveries worth 5,000 EVs during the latest COVID-19 disruptions.
Source Fool.com
