Nio (NYSE: NIO) shares are down almost 30% so far this year. But anyone who bought stock in the Chinese electric vehicle (EV) maker more recently has done quite well. Nio shares have soared by more than 65% over the past month.
The stock continued to surge again today as the trading week started. Nio’s U.S.-listed American depositary shares had gained 12.7% as of 10:15 a.m. ET. Some of the recent spike came from China’s latest plan to stimulate its struggling economy. But news that Nio has secured a new capital injection from strategic investors in China has the shares moving today.
Strong orders for Nio’s new mass-market brand
The company announced that three strategic investor partners will invest the equivalent of almost $500 million in Nio China, the company’s main operating unit. Nio will also contribute cash for newly issued shares of Nio China that will bring the total cash injection to nearly $2 billion.
Nio will subsequently hold a more than 88% interest in Nio China while the other existing investors will have nearly 12% ownership. While Nio finished the second quarter with about $5.7 billion in cash on its balance sheet, it is expected to burn about $1 billion per year on average over the next two years as it works to increase production volume and sales.
One big step the company recently took was to launch a new, family oriented, mass-market brand. The Onvo brand’s first model began deliveries last week. The company said its mid-size family L60 SUV has received “an order intake far stronger than anticipated.”
Nio may provide more information on the Onvo brand when it reports its September vehicle delivery results tomorrow morning. Nio has delivered more than 20,000 EVs for four straight months, and investors likely expect that streak to be extended.
Should you invest $1,000 in Nio right now?
Before you buy stock in Nio, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Nio wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $743,952!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of September 30, 2024
Howard Smith has positions in Nio. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Nio Stock Surged Again Monday and Could Keep Rising was originally published by The Motley Fool
