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Niu Stock Dropped Over The Week, But Potential Remains

Shares of the Chinese electric scooter manufacturer Niu Technologies (NIU) experienced a drop of more than 13 percent over the past week. The report that seemed too poor for investors, as well as the fourth quarter outlook drove the decline. However, the company is still growing and it is unlikely that demand for electric scooters will decline in the immediate future.

Niu obtained encouraging observations in the summer of 2020 and displayed a rally. Overall, as the stock price rose by over 231 percent since start of the year, Niu investors have had a very good year which exceeded their wildest expectations.

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Company’s third quarter results, seen as a justification for profit-taking, were not strictly negative. Revenue from Niu increased by 36.7% to $135.8 million, and the number of vehicles sold increased by 68% to 250,000. Adjusted earnings, compared to $0.13 a year ago, increased to $0.17. Revenue growth was lower than last year and income lower than expectations of the Wall Street analysts. This caused the stock price to decline, although the volume of Niu production increased and business was expected to slow down slightly. In addition, retail and consumer practices in general were impacted by the COVID-19 crisis. In the fourth quarter, the outlook for revenue growth of 5-15 percent was also negative, compared to the fourth quarter of 2019, when Niu had especially strong sales of spare parts and accessories for rental services for electric scooters.

Niu has however not lost its long-term prospects and continues to grow its revenue at a double-digit pace, and corrections could be an opportunity for investors.

Niu Technologies’ (NIU) stock gained 4.78% to $29.59 on Wednesday. Despite dropped over the past week, stock price is still up 7.50% over the month while the gain rises to more than 156% over the past six months.

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