Keep moving. Nothing to see here... Nio would like you to continue doing whatever you're doing (and not talk about Nio). That's why the Shanghai-based electric car company revealed its quarterly earnings and then abruptly canceled the call to discuss them with investors — that's when shares dropped 22%. Nio's had a rough few months:
- Sales of its core product — the ES8 electric SUV — plummeted by 22%.
- It's losing $5M a day. Let that sink in.
- Back in June it awkwardly had to borrow $200M...from its Chairman, CEO, and buddy company Tencent.
- Now it's focused on a new mission: “Pursue a leaner operation.”
One problem... It was already pursuing a leaner operation before this. Here's how Nio was struggling already in the months before things got worse. Earlier this year, Nio had to:
- Fire 2K workers and cancel plans for a new factory.
- Close its Patagonia-enveloped Silicon Valley office.
- Sell off its Formula E ("electric") racing team.
- Spend a whopping $49M to recall cars because of fire issues (and its co-founder just retired).
Bubbles can happen anywhere... Like in China's electric car market. Half the world's e-vehicle sales are in China — but that demand is supported by subsidies (the government hands out money to make buying cleaner cars cheaper). Now China's phasing out those subsides, eliminating them by 2020. The result: Nio's sales have fallen 2-straight quarters.