Nio (NYSE:NIO) stock jumped over 20% on Nov. 30 after reporting record deliveries for November. But it fell slightly overnight and it currently sits down about 4% as of this writing.
The Chinese electric vehicle (EV) maker delivered 14,178 vehicles in November, 31% over a year ago, and 106,671 over the last 12 months, according to its latest 6-K report.
The stock was expected to open Dec. 1 at about $12.09, a market capitalization of almost $22 billion. The company is expected to record sales of $5.6 billion this year, but that is at risk as China’s Covid crisis continues.
China Waking Up?
All Chinese stocks are rising in U.S. markets in the hope that the country’s lockdowns may finally end. Lockdown protests have destabilized the entire country.
A statement from vice premier Sun Chunlan that the omicron strain is “less pathogenic” may be the excuse president Xi Jinping needs to change course. The risk is that ending lockdowns, in a society where few are vaccinated, could cause a massive outbreak, but it’s a risk many Chinese citizens seem willing to take.
Nio’s rise wasn’t the biggest in the Chinese EV sector. Rival XPeng (NASDAQ:XPEV) was up 47% on Nov. 30 despite reporting a wider-than-expected loss. The bigger jump happened because XPeng was undervalued. Analysts recently downgraded the stock.
A move to open up wouldn’t just be good news for Nio, XPeng, and Li Auto (NASDAQ:LI), but also for Tesla (NASDAQ:TSLA), up over 8% in the last 24 hours. Tesla’s Shanghai factory, the largest EV plant in China, has been impacted by the lockdowns as well. Ending them would dramatically improve the company’s results.
NIO Stock: What Happens Next?
Nio is becoming a battlefield stock.
Bulls are convinced that China’s economy is a coiled spring. Ending the lockdowns will let Nio grow rapidly, export its cars to the U.S., and provide the headwind of a rising yuan.
Bears still call Nio a growth trap, with Tesla winning its home market and automakers around the world moving quickly into the EV market.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.