Nio (NYSE:NIO) stock closed down more than 6% as Chinese stocks in general struggled on Thursday. However, there is another factor contributing to NIO stock’s price decline. CNEVPost reported that Zhang Jianyong, Nio’s associate vice president of autonomous driving and head of autonomous driving systems engineering, is leaving the company.
Why Is NIO Stock Down Today?
Jianyong joined Nio in 2015 and helped envision the electric vehicle (EV) company’s autonomous driving program. While at Nio, he led the company’s “autonomous driving systems team of nearly 400 people.” The departure of Jianyong will likely shake up the internal structure of Nio’s management model.
However, Jianyong’s departure was in good spirit. The executive reportedly plans to start his own automotive chip startup. On top of that, Nio CEO William Li has expressed interest in investing in the startup. In the long term, this may potentially benefit Nio’s business if the startup is successful. Realistically, it’s still way too early to draw any conclusions from Jianyong’s departure.
Last month, Nio announced that it had successfully listed on the Stock Exchange of Hong Kong. The company initiated this move due to delisting fears on U.S. exchanges. Specifically, the Holding Foreign Companies Accountable Act (HFCAA) states that foreign companies must submit audited filings to U.S. auditors. If no audited filings are received for three consecutive years, then the violating company may be removed from U.S. exchanges.
The China Securities Regulatory Commission announced last week that it had begun “drafting a framework” to allow the more than 200 Chinese companies listed on U.S. exchanges to stay listed. Furthermore, it was reported that the Chinese government is aware some Chinese companies may be delisted from U.S. exchanges. This is because certain Chinese companies may own information that would compromise national security if shared.
UBS Upgrades NIO Stock
Last Monday, UBS analyst Paul Gong upgraded Nio from “hold” to “buy.” However, the analyst also lowered his price target from $46 to $32. Gong noted that Nio is “down 44% in the past 12 months.” On the other hand, the EV company is expected to launch three new models this year that could “drive sales acceleration.” UBS’s proprietary survey also revealed that the company is gaining increased brand recognition. According to Gong, the company’s “consumer mindshare” has now surpassed BMW (OTCMKTS:BMWYY), Audi and Mercedes (OTCMKTS:DMLRY).
Nio has an average price target of $44.74 among 26 analysts with coverage of the stock. The price target implies 120% upside from today’s closing price.
On the date of publication, Eddie Pan did not hold (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.