Chinese EV maker Nio (NYSE:NIO) has been making noise recently. Investors in NIO stock have been enticed by the car maker’s domestic production in China. However, many have increasingly become more interested in Nio’s global potential of late.
Recent social media-driven speculation that NIO could be closer to entering the U.S. market than people think has been a key catalyst for this stock. Let’s dive into what’s going on.
Reddit Mania Looks Poised to Take NIO Stock Higher
Despite currently trading down today, NIO stock is generating buzz thanks to a Reddit post showing a Nio ES8 vehicle in California.
A number of social media fans noted the company’s design and how this ES8 model is perfect for the U.S. market. Indeed, it appears the prospects are bright for Nio, if entry into the U.S. market materializes in short order.
Of course, a photo of a vehicle is great. The fact that Nio’s U.S. headquarters are in San Jose, California — and this vehicle was seen in the area — could mean this chatter is overblown. However, investors are likely taking a cue from chatter more than a month ago that a move to the U.S. was likely.
The company’s already said it’s aggressively pursuing global expansion options. CEO William Li has stated his plans to enter the European market later this year. U.S. expansion isn’t planned to take place until after Nio’s European entrance. However, there’s no time like the present for growth, and investors looking for growth have flocked to EV stocks like NIO en masse this past year.
The Bottom Line
I think it’s highly probable we could see some sort of announcement in the coming months on NIO’s planned expansion to the U.S.
However, some of this initial speculation is likely overblown. It takes time to bring any product to market, let alone those in highly regulated sectors.
That said, competitors such as Kandi Technologies (NASDAQ:KNDI) are already in the U.S. and have paved the way for Nio. Chinese competition in the U.S. is likely to heat up as the domestic EV market heats up. Nio would do well to gain a strong foothold sooner than later.
For now, investors willing to speculate may use any dip to do so. Accordingly, I expect continued buying to put upside pressure on this stock in the near term. Until we have more visibility into this stock, I think upside is more likely than not right now.
However, investors should also be aware that a ton of growth is priced into NIO stock right now. Maintaining proper portfolio discipline is more important now than ever.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.
