How Should you Play NIO Stock (NYSE:NIO) After The Recent Movement?

Nio Inc – ADR (NYSE:NIO) may have struggled considerably over the course of the past year, but things could be looking up for the Chinese electric car manufacturer after China decided to back electric vehicles more strongly. China boasts of plenty of electric car manufacturers, and NIO is perhaps one of the better bets for investors who might be looking to bet on the growth of this sector. Hence, it might be worthwhile for investors to take a closer look at NIO, which has made some highly interesting moves in recent months.

Key Developments

The most important thing to mention in this regard is the fact that the electric vehicle market in China is currently among the fastest-growing ones in the world. The electric vehicle market got a setback in 2019 when China slashed subsidies, and as a consequence, the NIO stock suffered as well.

However, things are expected to change now as China commits more heavily on electric vehicles. The NIO stock is currently trading at a significant discount when compared to its all-time high, and the coronavirus crisis has also resulted in a 14% decline in recent months. The company’s CEO Ben Li stated that the coronavirus pandemic is going to have an impact on the first-quarter performance, but he expects a rebound in the next quarter.

Most importantly, the company is also on the verge of solving its capital issues through a $1 billion investment. It will also see NIO setting up its headquarters in Hefei. While things may be looking up for the company, it should be noted that it faces stiff competition in the Chinese market. Tesla has already set up its factory in China, while Ford China already launched its first electric vehicle last year.

Then there are fellow Chinese competitors BYD, which is backed by Warren Buffett’s Berkshire Hathaway. However, NIO has an intimate knowledge of the Chinese market, and that could provide it with a natural competitive advantage. The Chinese authorities could start supporting the sales of electric vehicles that have swappable batteries. That could be another positive for NIO since the company already offers a battery swap service.

About Travis Garlick 1822 Articles
Been writing about and trading stocks since 2013. Manage a group of micro-cap investors on Facebook with over 15,000 members. Turned $8,500 into 185k the first year I started trading stocks and haven't looked back.