Nio Stock's Earnings Selloff Raises Stakes for Li Auto and Xpeng

NIO (NYSE:NIO) stock slipped sharply last week after publishing its financial results, which showed that its business continued doing well in the first quarter. Its US ADR dropped to $5.20, down 26% from its highest point in April. 

Nio Stock Dropped After Earnings

NIO's financial results showed that its revenues jumped by 112% YoY to $3.7 billion, higher than the expected $3.55 billion. This revenue was driven by stable prices and the surge in vehicle deliveries, which rose by 98% to 83,465. 

A key reason why Nio shares dropped after earnings is that it made a net loss in the first quarter. It made a $48 million loss, a quarter after it notched its first quarterly profit. 

Nio's stock also retreated after China's Securities Regulatory Commission (CSRC) said that it would start a crackdown on cross-border securities trading within two years. It has already started penalizing brokers, like Futu Holdings (NYSE:FUTU). 

Focus Shifts To Li Auto And XPeng

After Nio's earnings, traders are focusing on the upcoming earnings by Li Auto (NASDAQ:LI) and XPeng (NYSE:XPEV). The two Chinese EV giants will publish their results on Friday this week.

Their results come as their stocks remain in a deep bear market. Li Auto is trading at $15.90, its lowest point since January this year, and 66% below its highest point on record. 

Similarly, XPeng stock dropped to $15.60, its lowest level since February and 45% below its highest level. This crash also mirrors that of BYD, the biggest Chinese EV company whose stock has dropped to $11.6 from the all-time high of $20.

Wall Street analysts expect the two companies to publish weak financial results. Li Auto's revenue is expected to drop by 15.6% to CNY 21.8 billion ($2.90 billion). Its most recent deliveries data showed that it delivered 95,142 vehicles in Q1, up by 2.5% YoY. 

The company blamed its weakness to its production bottleneck during the quarter and is now hoping that its newly launched Li L9 will help supercharge its growth. It costs between $56,000 and $66,000 in China.

XPeng, on the other hand, is expected to announce CNY 12.86 billion ($2.56 billion), down by 18% YoY. It delivered 62,682 vehicles in the first quarter, down from 94,008 in the same period last year. It is now hoping that its new robotaxi vehicle will boost its growth.

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