Shares of electric vehicle (EV) stocks, especially Chinese EV stocks, are in the green today following a flurry of positive developments. These companies include Mullen Automotive (NASDAQ:MULN), Li Auto (NASDAQ:LI), XPeng (NYSE:XPEV), and Nio (NYSE:NIO).
China recently announced that it had begun to ease lockdown restrictions in Shanghai, Beijing, and many other places. Easing restrictions will allow consumers to be more active and help jump start supply chain efficiencies. In addition, both Shanghai and Beijing and major hubs for business activity.
Out of China’s top 50 cities by economic activity, none of them currently have widespread restrictions in place. In addition, it seems that the Chinese tech crackdown is easing as well. Beijing officials appear to be fulfilling their promises made last March to support the economy and prop up a shaky housing market.
Chi Lo, a senior investment strategist at BNP Paribas Asset Management, explained:
I think we are bumping along the bottom here. When you look at the biggest drag on Chinese equities — which was the regulatory tightening on the tech sector — the worst is over.
Meanwhile, shares of MULN stock will be added to two indexes on June 27 after the market close. Let’s get into the details.
Why Are EV Stocks Up Today?
Later this month, Mullen will be added to the Russell 2000 and Russell 3000 indexes. The Russell 3000 is a market capitalization (cap) weighted index that tracks the 3,000 largest stocks in the U.S. stock market. Meanwhile, the Russell 2000 is a market cap weighted index that tracks the 2,000 smallest stocks in the Russell 3000. The Russell 2000 is often used as a benchmark to track small cap companies. The addition of MULN stock into the two indexes will provide the EV company with greater liquidity and recognition.
Mullen CEO David Michery added:
I believe that our inclusion in the Russell Indexes will bring Mullen Automotive great visibility within the institutional investment community. This is an excellent milestone for our Company, which will provide increased liquidity and investor awareness.
On another note, consensus estimates from 26 auto analysts points to Nio achieving breakeven status by 2024. By that year, the analysts expect Nio to post a profit of $376 million. The company also announced its May numbers, posting deliveries of 7,024 vehicles. The delivery figure shows a gradual improvement in deliveries compared to April as Nio works to recover from lockdown restrictions.
Year-to-date, Nio has delivered 37,866 vehicles, up 11.8% year-over-year (YOY). On June 9, the company will disclose its first-quarter earnings.
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.
