Please ensure Javascript is enabled for purposes of website accessibility

Why Nio Stock Closed Higher Today

By Howard Smith – Dec 10, 2021 at 5:52PM

Key Points

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors may have been looking at another EV maker to realize Nio has a good thing going.

What happened

Friday's market session was a bumpy one for Chinese electric-vehicle (EV) maker Nio (NIO -2.16%). At various points, Nio shares were down over 2% and up 1.5% today before closing the final session of the week up 0.65%. 

So what

There wasn't any company-specific news from Nio today. It does have a high-profile event coming next week with its Nio Day, and that may have helped to keep trading active and ending on a high note. But it also might be something else in the EV sector that caught investors' attention. 

Car passenger holding cash out of the window.

Image source: Getty Images.

A focus in the EV sector came on this side of the world yesterday with shares of Lucid Group dropping on news of a capital raise. That company gave investors more details on its plans today, and the stock recovered some of yesterday's losses. Lucid will raise upwards of an additional $2 billion to bring its cash hoard to nearly $7 billion. That makes sense for a company that has just begun production and will need to spend capital to ramp up. But that may also have made some investors realize what a good position Nio is in with its own balance sheet. 

Now what

As of Sept. 30, 2021, Nio had about $7.3 billion in cash, cash equivalents, and short-term investments. Lucid may be working on delivering its first 100 electric vehicles, but Nio delivered almost 25,000 EVs in its third quarter alone. By comparison, Nio looks like it's in fine shape financially as it continues to ramp up production.  

Its Q3 deliveries were limited due to downtime necessary to upgrade its manufacturing lines and prepare for production of the new ET7 sedan, which it plans to begin shipping early next year. Nio already has the cash on its balance sheet that Lucid -- a highly regarded stock -- is working to gain, even though Lucid seemingly has much more spending to do to reach Nio's level of production. 

That reflects well on the Chinese EV maker as it expands sales into Europe this year and next. It also might help explain why investors pushed the stock to end the week on a high note. 

Howard Smith owns Lucid Group, Inc. and NIO Inc. The Motley Fool owns and recommends NIO Inc. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.