Chinese electric vehicle manufacturer Nio (NYSE:NIO) has had a rough 2022. NIO stock has plunged from above $33 to a current price in the range of $20. Although the news coming out of the company is mixed, there’s reason to believe things are headed in the right direction.
News that Nio reported quarterly sales that exceeded expectations wasn’t enough to offset a delivery forecast that fell short of expectations. That’s a prime example of the market being forward-looking at almost all times. The news led to share prices declining 5% in pre-market trading on March 24. Nevertheless, prices moved upward in the days following the news.
Investors in Nio may have another positive catalyst at hand. That news came on April 4 when it was reported that Chinese regulators signaled concessions to U.S. regulators. The issue of auditing Chinese firms has long weighed on Chinese shares listed on U.S. exchanges. So when the Chinese Securities Regulatory Commission released a statement that it would loosen auditing rules, Nio benefited.
One of the key concessions is the legal requirement that on-site audits be conducted by Chinese authorities. That requirement has led to ongoing tension as U.S. auditors feel the rule was unfair to investors stateside who put their money into Chinese ADRs.
In essence, cross-border regulatory cooperation is increasing. That is a step in the right direction for Chinese ADRs listed on U.S. exchanges. Nio is one such stock.
The news that sales beat expectations was somewhat tainted by delivery forecasts that did not meet expectations. That is a bit of a mixed result. But signals that Chinese regulators are open to modifying rules for U.S.-listed Chinese firms represents significant progress. Nio should benefit. It’s also important to remember that NIO stock remains widely favored on Wall Street and may be the truest example of a real buy-the-dip opportunity.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
