Chinese electric vehicle maker Nio (NYSE:NIO) sure likes to keep investors on their toes. Today, a roughly 6% dip in shares has many questioning the move, especially without any company news. So what could be behind the tumble in NIO stock? And what do investors need to know here?
As a reminder, Nio has been rallying lately thanks to its recent Nio Day event. There, the red-hot company unveiled its first all-electric sedan, a 150 kilowatt hour battery and advancements to its autonomous vehicle tech. In the aftermath, analysts boosted their ratings and investors continued to jump on the NIO stock bandwagon.
At the same time, the EV maker looked to take advantage of recent positive sentiment. Just last week, we saw a similar tumble after the company issued $1.3 billion in senior convertible notes. Without further details on why it needed the funding, a temporary sense of panic hit the stock. However, Nio had recovered since then, climbing higher along with broad EV sentiment.
So then, what is behind the dip in NIO stock today?
Although it is not entirely clear, one possible reason comes from news of a new lockdown in China. As Steven Lee Myers wrote for the New York Times, 22 million individuals are now on lockdown following a village wedding party. This lockdown includes parts of Beijing, and other cities including Shijiazhuang, Xingtai and Langfang. Importantly, the size of this lockdown is now double that of the one in Wuhan from January. And while it pales in comparison to lockdowns and case resurgences elsewhere, it raises questions about the state of things in China.
Investors familiar with the news may be worried about what this broadly means for China and its companies, including Nio. However, there may be one other reason for the dip.
Why NIO Stock Is Dipping Today
As with other Covid-19 headlines, the new lockdowns in China are unsettling. However, Nio does not appear to be directly impacted by the news.
That is where another potential reason for the dip comes in. As John Rosevear wrote for the Motley Fool, a Nio executive just parted ways in favor of Foxconn Technologies. The Apple (NASDAQ:AAPL) partner just announced a new electric vehicle initiative, and former Nio co-founder Jack Cheng will serve as CEO of the EV business. This comes as Alibaba (NYSE:BABA), through its own joint venture, also is rolling out two new all-electric vehicles.
For investors, this news is just another reminder of the competition Nio faces in China from companies like Tesla (NASDAQ:TSLA) to Li Auto (NASDAQ:LI) to Alibaba and Foxconn. However, the company continues to surge ahead. In fact, as InvestorPlace contributor Chris Lau wrote yesterday, $100 per share could be just around the corner for NIO stock.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer with InvestorPlace.com.