The U.S.-listed ADSs of Chinese EV manufacturers Nio Inc – ADR NIO, Xpeng Inc – ADR XPEV and Li Auto Inc. LI were all trading sharply lower Tuesday, reflecting ongoing weakness.
Sector-Wide Sell-Off: Nio shares have been extremely volatile: since closing above the $60 mark Feb. 9, the stock closed lower for six consecutive sessions before breaking the losing streak and ending higher Friday.
The lean patch saw the stock dipping to a one-month low of $52.60 on Feb. 18.
See also: How to Buy Electric Vehicle (EV) Stocks
After recouping some of the losses Friday, Nio headed lower yet again Monday, ending the session at $50.68, down 7.92%.
XPeng shares have been lower for eight sessions and closed Monday below $40 at a three-month low of $38.
Li Auto is also trading at its lowest level for the year.
Incidentally, shares of bigger rival Tesla Inc TSLA are also seeing a lean patch. After hitting an all-time high of $900.40 in late January ahead of fourth-quarter results, the stock began pulling back.
Tesla closed below the $800 handle Feb. 16 and has lost over 10% since then, signaling it is in bear market territory.
Multiple Catalysts Driving EV Stocks Lower: The broader market is on a retreat. The S&P 500 Index has declined for five sessions in a row now, as rising bond yields and a sector rotation out of tech stocks and into cyclicals in a pandemic recovery weighed on the index.
The pullback in Chinese EV stocks came amid a lack of any meaningful news flow due to the seven-day Chinese Lunar New Year break.
Some of the weakness may have to do with caution ahead of earnings releases from these companies.
Li Auto sets the ball rolling, with its financial results due Thursday. Nio is scheduled to report its fourth-quarter results March 1 and XPeng is due to report March 8.
For XPeng, there is an additional trigger, with the 180-day IPO lock-up period expiring Tuesday. This would allow insiders to liquidate their holdings.
While highlighting the lock-up period expiry, Deutsche Bank Securities analyst Edison Yu said in a tweet it has been tough few weeks for bulls, as sentiment is getting hit by increased competition and possibly due to EV fatigue from SPACs.
Fourth-quarter earnings reports can potentially change the narrative, he said.
EV Price Action: Nio shares were sliding 5.56% to $47.88 at last check; XPeng was slipping 5.41% to $36.02; and Li Auto was moving down 5.05% to $26.44.
Tesla shares were down 2.06% to $699.78.
Related Link: Nio Analyst Sees Meaningful Tailwinds For EV Brand's Sales Volume
Photo courtesy of XPeng.
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