Share Prices for Nio Experience a Drop in the Stock Market

As per the latest reports, the share prices for Nio have experienced a drop. According to analysts, the dip in the share prices may have something to do with the third quarter of 2021. On Wednesday, September 1, Nio revealed that it lowered its revenue estimations for the third quarter of 2021.

As a result of the change, it is highly like that the investors, as well as the shareholders, lost their confidence in the company’s market presence. The estimation reduction for the third quarter of 2021 could be the only logical reason that must be compelled by the investors to move away from Nio.

Nio is a major electric vehicle manufacturing company that is based in China. The company currently manufactures and supplies its vehicles in its local (Chinese) electric vehicle (EV) market.

Nio also revealed the reason why it had to trim its earnings and revenue estimations for the third quarter of 2021. Since the end of 2020, the shortage of semiconductors is one of the major drawbacks for every company manufacturing electrical stuff.

As Nio is a completely electric vehicle company, semiconductors play a key role in the completion of the Nio vehicles. Therefore, as the company is running short on the supply of semiconductors, it had to cut down on its electric vehicle productions.

The cutting down on the production of the vehicles would eventually lower the number of sales Nio would manage to achieve in the third quarter of 2021. Therefore, the company had to reduce the revenue estimations for the said quarter until the situation becomes normal from the semiconductors’ end.

At present, the entire semiconductor market is extremely volatile. This is mainly because the demand for semiconductors is at an all-time high. After the pandemic lockdowns, the manufacturing plants for electric appliances and vehicles have started re-opening.

As the production in the companies increases, so does the consumption of semiconductors. Unfortunately for electric vehicles in the United States, the demand for semiconductors is much higher than the supply chain.

At the beginning of the third quarter of 2021, Nio analysts had predicted that the company would be able to achieve sales of 23,000 to 25,000 electric vehicles. However, Nio only managed to deliver units that were approximately between 23,000 to 25,000 electric vehicles.

Just recently, the new stock price for Shanghai Company was trading through the stock market at a price of $37.29 per share. This goes to show that a significant (5%) drop has been observed with share prices for Nio.

It was back on Tuesday of 2021 when Nio had registered itself on the public market. Since then, its prices have experienced a total of 14% loss.