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Why NIO Stock Continued Its Run on Thursday

By John Rosevear – Jul 9, 2020 at 4:15PM

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Is more new financing in the works?

What happened

Shares of Chinese electric-vehicle maker NIO (NIO 5.27%) closed higher again on Thursday, after a Chinese business media outlet reported that the company may be close to a securing a hefty line of credit.

NIO's American depositary shares ended Thursday's session at $14.63, up 13.6% from Wednesday's closing price. The shares have risen about 88% since the beginning of July.

So what

NIO's shares are still running on the momentum of last week's upbeat sales report. After a dismal first quarter amid China's coronavirus shutdown, NIO recovered -- and then some -- in the second: Sales were up over 190%, as last year's investments in an expanded store network began to pay off for the company.

That, plus the recent financing deals that have bolstered NIO's once-shaky balance sheet, would be enough to set off a bullish stampede for the stock. 

A blue NIO EC6, a five-passenger SUV with a sloping car-like roofline.

NIO's new EC6 is a sleeker version of its ES6 crossover SUV, with a more coupe-like roofline. Image source: NIO.

But there might be more news soon, and that may have given NIO's shares an additional push on Thursday. 36kr, a Chinese technology and business news outlet, reported that NIO will soon sign a deal with six banks to secure a new 10 billion Chinese yuan ($1.42 billion) line of credit. 

While NIO wouldn't confirm the report, such a deal would give the company added access to working capital as it gears up to put additional models into production. If it happens, it's clearly bullish. 

Now what

I suspect we'll know soon if that credit line report is for real. If not, auto investors will have to wait a bit longer for an update from NIO's management. The company hasn't yet scheduled its second-quarter earnings report, but it's likely to happen sometime next month.

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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