Why Nio Stock Bounced Today

October deliveries were lower than spectacular, but investors are having a take into yarn on the motive in the support of it.

Howard Smith

Key Points

  • A consuming descend in month-to-month deliveries could presumably maybe merely correct be setting Nio up for the long bustle.

What came about

Shares of Chinese electric vehicle maker Nio (NYSE:NIO) opened Monday’s shopping and selling session more than 3% below Friday’s closing designate after the corporate released its October vehicle birth files. However investors looked previous the disappointing numbers and reversed course on the stock, sending shares about 2% better as of 11: 20 a.m. EDT.

So what

Merchants own proven excessive hopes for Nio, giving the corporate a market cap of more than $65 billion despite the fact that it has yet to anecdote a profit. The enthusiasm is in accordance to its increase and future possibilities.

Nio ES6 electric SUV with red wall background.

Nio ES6 electric SUV. Image source: Nio.

In the predominant 9 months of 2021, Nio has delivered 150% more autos than it did in the prior-yr period. So it be comprehensible that investors in the foundation reacted negatively when the corporate talked about its October month-to-month deliveries plunged 27.5% yr over yr and 65% sequentially from Sept. 2021. However the numbers did no longer present your total account for the corporate. 

Now what

Admire many global automakers, Nio has been tormented by provide chain constraints, and the corporate talked about that downside affected October production. The assorted motive the corporate delivered most productive 3,667 autos in the month change into “the restructuring and upgrades of manufacturing traces and the preparation of up to date products introduction,” Nio talked about in a press launch. 

That work lasted thru Oct. 15, in response to the corporate, and it is helping to space Nio up for the launch of its first luxurious sedan, which is scheduled to be on hand early in 2022. Nio has moreover talked about it plans so that you just can add two varied original products in 2022. To proceed to spice up interrogate, the corporate, alongside with its manufacturing partner, is expanding production ability. It plans with the design to compose on the least 240,000 autos every yr once fresh enlargement work is total. 

Merchants seem ready to present the corporate a pass on October’s numbers, on condition that they’re partly the conclude result of work for future increase. That pass will most likely final most productive till the corporate studies its November deliveries, nonetheless, or till it makes its subsequent monetary change, due subsequent Tuesday, Nov. 9.

This text represents the concept of the author, who could presumably maybe merely disagree with the “legitimate” advice station of a Motley Fool top price advisory service. We’re motley! Questioning an investing thesis — even thought to be one of our luxuriate in — helps us all own seriously about investing and manufacture choices that support us turn out to be smarter, happier, and richer.

Howard Smith owns shares of NIO Inc. The Motley Fool owns shares of and recommends NIO Inc. The Motley Fool has a disclosure policy.”>

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