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Why NIO Stock Is Higher Today

By John Rosevear - Mar 9, 2021 at 11:43AM

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News on interest rates has investors jumping back in.

What happened

Shares of Chinese electric-vehicle maker NIO (NIO 1.68%) were trading higher on Tuesday amid a broad rebound following a sectorwide sell-off. 

As of 11:15 a.m. EST, NIO's American depositary shares were up about 13.6% from Monday's closing price.

So what

NIO's shares, like a lot of other high-flying electric-vehicle stocks, had fallen sharply in recent sessions. One likely culprit: the rate on the benchmark 10-year U.S. Treasury bond, which while still low by historical standards, had recently risen to its highest level in over a year. That led investors to sell off growth stocks with speculative valuations, including NIO and many of its electric-vehicle peers.

And now? The 10-year's rate retreated a bit in overnight trading, and relieved investors -- or at least traders -- have swarmed back in. 

In somewhat related news, category leader Tesla (TSLA -5.88%) was also up sharply on Tuesday. Tesla's stock price had been down over 30% from its recent high around $900, on those broad concerns about rising rates as well as some issues specific to Tesla. While those Tesla-specific issues aren't directly relevant to NIO, Tesla is the category leader -- and its moves affect sentiment around other EV stocks.

NIO CEO William Bin Li with the ET7 at an event in January.

NIO revealed its new ET7 sedan in January. The sedan, loaded with advanced hands-free driving features, is expected to go into production around the end of 2021. Image source: NIO.

Now what

For NIO investors, the key takeaway here is that NIO's fundamentals haven't really changed in the last week, even as the stock has dropped and rebounded. While the company's fourth-quarter loss was somewhat wider than analysts had expected, it's still posting good sales growth, it's still on track to launch two new sedan models over the next year -- and it still has plenty of cash to ride out any storms.  

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Stocks Mentioned

Nio Inc. Stock Quote
Nio Inc.
$14.55 (1.68%) $0.24
Tesla, Inc. Stock Quote
Tesla, Inc.
$724.37 (-5.88%) $-45.22

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