What happened
Shares of Chinese electric-vehicle maker NIO (NIO +3.58%) were moving higher on Wednesday, as buyers looking ahead to the company's earnings report next week moved in after Tuesday's sectorwide sell-off.
As of 1:15 p.m. EST, NIO's American depositary shares were up about 4.7% from Tuesday's closing price.
So what
NIO's stock was one of many electric-vehicle stocks rebounding to varying degrees on Wednesday. The group sold off sharply early on Tuesday, as investor concerns about rising U.S. interest rates hit more speculative stocks hard. Electric-vehicle stocks faced extra pressure following a sharp decline in shares of category leader Tesla (TSLA +2.35%).
Nothing about NIO's fundamentals or story changed, of course. All of these things are still true:
- NIO has plenty of cash in the bank;
- NIO's sales growth has remained strong into 2021;
- The company has two new sedan models on the way;
- It will soon begin rolling out an updated version of its automated battery-swap station across China;
and last, but certainly not least:
- NIO's stock is still trading at a very high valuation.
CEO William Bin Li showed off NIO's upcoming ET7 luxury sedan at an event in January. The new sedan -- and a smaller sibling -- are expected in roughly a year. Image source: NIO.
Simply put, if you were bullish on NIO a week ago, there's no reason not to be bullish now. I think that realization is why the stock is bouncing today.
Now what
Auto investors can look forward to an update next Monday, when NIO reports fourth-quarter and full-year 2020 earnings. I expect it'll provide some guidance for 2021 as well. Note that NIO's earnings report will be released shortly after the U.S. markets close, but -- because of the time difference between the U.S. and China -- the conference call won't happen until 8 p.m EST, or 9 a.m. Beijing time.
