Why NIO Stock Dropped Today, Then Recovered

The company’s shares got caught up in the uncertainty triggered by a government crackdown on U.S.-listed Chinese companies.

Howard Smith

What came about

Electric automobile (EV) stocks are liable to be shapely volatile. Shares of Chinese EV maker NIO (NYSE:NIO) adopted that sample right this moment, but it wasn’t the EV sector that triggered the disruption. Shares of many U.S.-listed Chinese stocks are on the trudge right this moment. NIO shares first dropped 2.4% sooner than bouncing as a lot as a develop of 2.7%. However as of 12: 30 p.m. EDT on Tuesday, shares had been wait on in the crimson, down about 1%. 

So what

The seesaw session comes after the Chinese government cracked down on Chinese scramble-hailing company DiDi Global (NYSE:DIDI) over the weekend. DiDi just went public on the New York Inventory Alternate final week, and the Chinese government looks to be permitting them to perceive who’s boss.

bull with green up arrow and bear with red down arrow.

Checklist source: Getty Pictures.

Chinese regulatory officials launched a cybersecurity overview of DiDi and prohibited new downloads of the company’s app, in step with reporting by The Wall Avenue Journal. Most U.S.-listed Chinese stocks dropped on the start right this moment, but subsequent news that the crackdown is centered on skills companies might per chance per chance per chance well be why NIO shares bounced wait on.

Now what

NIO has a heavy reliance on the Chinese government. Its EVs are manufactured underneath an settlement with the remark-owned Jianghuai Automobile Crew. It no longer too long ago renewed that settlement out to Would per chance moreover 2024. The renewal comes as the company prepares to start its first sedan, double its production capacity, and start sales in Norway in its first market outdoors of China. 

Patrons looked just a shrimp nervous early right this moment about news of a new crackdown, but NIO shares recovered as it looks love the federal government is no longer targeting companies with U.S. listings in a massive web. 

This article represents the opinion of the creator, who also can just disagree with the “legit” recommendation put of a Motley Fool top rate advisory carrier. We’re motley! Questioning an investing thesis — even one amongst our own — helps us all state severely about investing and assemble choices that lend a hand us change into 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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