What happened

While shares of Niu Technologies (NASDAQ:NIU) kept pace with the 7.9% rise of the S&P 500 in 2019 and climbed 7.6%, the stock of the Chinese manufacturer of electric scooters moved into the fast lane in 2020, ripping 229% higher, according to data from S&P Global Market Intelligence

What drove investors to hop along for a ride? Besides the reopening of the Chinese economy, investors picked up shares following news of the company's strong scooter sales growth and Wall Street's espousal of a bullish outlook on the stock.

A businessman marks a line trending up on a digital financial chart.

Image source: Getty Images.

So what

Pumping the brakes early in 2020, investors avoided Niu's stock amid the uncertainty wrought by the global pandemic, particularly related to the restrictions that the Chinese government imposed in the first few months of the year. Although Niu sells its scooters in international markets, China represents the lion's share of its customer base -- about 93% of scooter sales in 2019. Consequently, when China began lifting restrictions in April, investors celebrated, and sent shares soaring about 22% in the first month of the second quarter.

The stock recognized additional gains in October, when the company reported encouraging scooter sales growth in both China and international markets. According to management, the international growth stemmed from "demand recovery" and product launches of new e-bicycle models.

Bullish takes from analysts represented another catalyst for the stock's rise. In mid-October, Alexander Potter, an analyst at Piper Sandler, hiked his price target to $31 from $25 according to Thefly.com. Several weeks later, another optimistic take came from Citi when its analyst Beatrice Lam raised the price target to $40 from $23.50 and upgraded the stock to buy from neutral.

Now what

Extending its strong 2020 performance into 2021, Niu's stock has soared more than 26% so far in January, largely predicated on the company's announcement that annual scooter sales increased 43% from 2019 to 2020. While this is an auspicious sign, this is hardly the only metric by which the company's growth is measured; therefore, investors should pay close attention to the company's fourth-quarter earnings report to see how the sales growth translates to profits and cash flow.