Please ensure Javascript is enabled for purposes of website accessibility

Why Nio Stock Moved Up and Then Back Down Friday

By Howard Smith – Jan 7, 2022 at 2:53PM

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

Nio shares jumped after Forbes published an article predicting "a solid 2022" for the stock.

What happened

The stock of Chinese electric vehicle maker Nio (NIO 3.02%) has been on a slide this week, along with many other growth names. But the stock reversed course Friday morning, causing a jump of 3.6% early in the session. The gains didn't hold, however, and shares slid as much as 2% below Thursday's closing price. As of 1:44 p.m. ET, Nio shares were splitting the difference, up just 0.36%. 

So what

The initial reversal of the recent downtrend in Nio stock came after Forbes magazine published an article predicting the stock will outperform in 2022. But Nio American depositary shares didn't hold that gain, as a general slide in high-growth tech stocks resumed with markets heading into the weekend.  

Gold Nio ET5 sedan on road.

The midsize ET5 sedan will be available later in 2022. Image source: Nio.

Now what

Forbes pointed to several factors it believes will result in a strong year for Nio stock. Shares are trading at less than five times projected 2022 revenue, which compares favorably to competing EV makers. The authors noted that Tesla and fellow Chinese EV company XPeng are valued at 15 times and seven times estimated revenue, respectively. 

Catalysts for Nio this year include the launch of at least two new vehicles. The company says it will begin confirming orders for its ET7 luxury sedan on Jan. 20, 2022, with initial deliveries scheduled for the end of March. And shipments of the midsize ET5 sedan are expected to begin in September. 

The ET5 will be priced at the equivalent of about $50,000 before subsidies. But customers who subscribe to Nio's Battery-as-a-Service (BaaS) option will be able to purchase the ET5 for about $40,000. That option allows customers to save money upfront and utilize Nio's growing battery swap station network to quickly obtain fully charged batteries. The service helps set Nio apart from competitors and brings the company a subscription income stream. Investors will be watching the rollout of the two new sedans to see if sales growth will continue to remain strong in 2022.

Howard Smith owns NIO Inc. The Motley Fool owns and recommends NIO Inc. and Tesla. 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.