What happened
Many stocks in the electric vehicle (EV) sector have been in correction mode over the last month. The shares of Chinese EV maker Nio (NIO -5.35%) have been no exception, dropping more than 12% over the past four weeks. But Nio stock has reversed course today, rising as much as 5% in early trading. Nio shares remained up 3.3% as of 11 a.m. ET.
So what
Two items of news helped investors jump into Nio stock today. Company founder and CEO William Li attended a ceremony yesterday marking a new strategic partnership with Chinese steelmaker Baoshan Iron & Steel (Baosteel), reports China EV industry follower CnEVPost. Additionally, HSBC analyst Yuqian Ding just reiterated a buy rating on Nio stock, and raised the firm's price target in a note shared by TheFly.com.
Nio will begin confirming orders for its ET7 luxury sedan on Jan. 20, 2022. Image source: Nio.
Now what
HSBC's new $54 price target for Nio would represent an 87% gain over Monday's closing share price. Ding pointed to the continued growth in electric vehicle deliveries after Nio reported a 109.1% year-over-year jump for the full year 2021. The analyst also noted that Nio will be adding two new sedan models this year, with plans for at least one additional new product in 2022.
Nio said it will begin confirming orders for its ET7 luxury sedan a little more than a week from now, with initial deliveries scheduled for the end of March. It also plans to begin shipments of the smaller ET5 sedan in September 2022. The new partnership with Baosteel looks to be a way for Nio to ensure supply needed to support its growth plans.
Li said in a statement, "Nio needs a global partner like Baosteel to work hand-in-hand on products, supply chain, technology innovation, new material applications and zero-carbon pathways." Investors today seem to think it will be beneficial over the long term for Nio to have such a partnership.
