NIO Stock Stumbles Despite Electric Drive System News

  • Nio (NIO) stock is sinking again today on an otherwise positive day in the market.
  • The drop comes on news of high-profile additions to the Holding Foreign Companies Accountable Act (HFCAA) list.
  • That said, Nio does have some promising catalysts on the horizon.
Image of Nio (NIO) logo branded on the exterior of a corporate building.
Source: Sundry Photography / Shutterstock.com

Today, investors in Nio (NYSE:NIO) stock are once again licking their wounds. Shares of the Chinese electric vehicle (EV) maker are down just under 1% on an otherwise bullish day in the markets. Most major indices are up, with bullish sentiment beginning to materialize once again.

Of course, China-based stocks have been hit hard lately, so this move may be unsurprising to investors. Today, news that some major Chinese companies have been added to the Holding Foreign Companies Accountable Act (HFCAA) list has pushed the group down in a big way. Although Nio appears to have skirted the list once again, investors seem to believe it’s just a matter of time before delisting concerns become real.

This news has overshadowed other very positive catalysts for the company. For example, today Nio reported that it has produced its 500,000th electric drive system. Additionally, the company unveiled the first electric drive system sample for its upcoming ET5 model. From a growth perspective, these are big catalysts that investors ought to be bullish on.

But that’s not all. In addition to the electric drive system news, the company also just announced an agreement between Nio and Hungary for its first European battery swap station plant. That’s something many investors want to see.

Let’s dive into what to make of NIO stock right now.

NIO Stock: Buy, Hold or Sell?

From a growth perspective, there’s a lot to like about Nio’s prospects right now. Not only does the company have exposure to the fastest-growing EV market in the world — China —  but it also has global growth prospects many believe to be unparalleled. Today’s announcements are indications of just how easily investors can become bullish from reading headlines.

That said, it’s also clear that Nio’s status as a China-based company makes NIO stock un-investable for many traders. Institutional investors concerned about the potential for a permanent capital loss will not likely jump aboard. Accordingly, investors need to primarily rely on retail demand for shares.

In this market, that’s a hard sell. As such, in my view, NIO stock may be one of the more difficult growth stocks to own right now. And that’s considering the fact it has a lot of good prospects ahead.

On the date of publication, Chris MacDonald 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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


Article printed from InvestorPlace Media, https://investorplace.com/2022/07/nio-stock-stumbles-despite-electric-drive-system-news/.

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