Shares of Chinese electric vehicle (EV) maker NIO (NYSE:NIO) were trading lower on Tuesday amid a broad sell-off of EV stocks, and despite good sales results and an upgrade from a longtime Wall Street skeptic.
As of 10:30 a.m. EST today, NIO's American depositary shares were down about 6.4% from Monday's closing price.
NIO was just one of a group of EV stocks that were trading lower on Tuesday. Most of them have had strong bull runs in recent months; a retreat is no surprise and, at least for the moment, probably shouldn't worry long-term-minded auto investors.
But absent that sector pressure, NIO's stock might otherwise be up on two pieces of good news. First, it reported its November deliveries before the U.S. markets opened on Tuesday, and they were strong: 5,291 vehicles delivered in November, a new monthly record and a sign that demand for the company's upscale electric SUVs has continued to be strong after its impressive third quarter.
NIO's recent results have won over a longtime Wall Street skeptic. In a new note on Tuesday morning, Goldman Sachs analyst Fei Fang upgraded NIO to neutral with a price target of $59, saying that NIO's success in increasing its vehicles' range, its batteries-as-a-service program, and the positive effects of revamped Chinese government incentives seem likely to keep its sales growing for a while longer.
An upgrade to neutral may not sound like much, but Fang had previously rated NIO's stock as a sell, with a price target of just $7.70. This is a big change for Goldman.
NIO also said that it's trying to accelerate a production-capacity increase it had planned to implement in early 2021.
That capacity increase will allow NIO to produce about 7,500 vehicles per month. The company last upgraded its production line in September, boosting monthly output from around 4,000 to roughly 5,000, but demand is already outpacing that increase.
CEO William Bin Li said during the earnings call last month that he hoped to have the increase in place by the end of January; NIO said today that it's now aiming to have its production line and its suppliers up to that speed before the end of December.