What happened
Shares of Chinese electric vehicle (EV) maker Nio (NIO -0.36%) dropped as much as 4% early Wednesday before staging a rebound. After reversing course and trading up 3.8% at the midday high, Nio shares had settled back to about even as of 1:47 p.m. ET.
So what
The volatility comes a day before the company reports its fourth-quarter and full-year 2021 financial results. And like the up-and-down movement of the stock today, there are both positive and negative angles on what the company will report. Along with headwinds that include supply chain challenges and rising raw material costs, investors and analysts have been balancing the operational progress the electric car maker has on the horizon.
Image source: Nio.
Now what
Nio's production volume growth has leveled off somewhat in recent months for several reasons. The company took some time to retool equipment in preparation for the upcoming initial deliveries of its luxury ET7 sedan. But it also has been impacted by supply chain constraints and semiconductor shortages that other automakers have been dealing with.
Some analysts, however, are focusing on progress related to expansion of the business. Earlier this week, Deutsche Bank analyst Edison Yu said his firm thinks Nio is on track to increase production from levels near 10,000 vehicles per month to close to a rate of 25,000 per month by the end of this year, reports Barron's. Recent upgrades in manufacturing capacity will support that level if demand is there. Yu believes it is, and the company will respond.
Yu set his price target for Nio shares at $50, which represents a gain of 130% over Tuesday's closing price. The shares have tumbled more than 30% year to date, as investors saw too much risk in many U.S.-listed Chinese shares. Those fears have subsided some after China's top policymaker expressed support for the economy and its capital markets recently.
Investors will now be more focused on the company fundamentals and the operational updates provided tomorrow after the bell.
