What happened
Investors didn't like what they heard when Nio (NIO 3.49%) provided its fourth-quarter and full-year 2021 financial and operational update late last week. The stock dropped after the report on Friday, but some investors took that as an opportunity to buy on Monday morning. Nio shares popped 6.6% in early trading. As of 11:32 a.m. ET, the stock had settled to a gain of 3.8%.
So what
The drop after earnings came mainly from the company's delivery outlook this month. Nio reports its deliveries monthly, so when it provided its first-quarter outlook, investors were really learning how March was going. But even with some new COVID-19 lockdowns hitting Chinese cities, investors are thinking that the post-earnings drop may be a buying opportunity today.
Image source: Nio.
Now what
Nio told investors that its first-quarter electric vehicle deliveries will be effectively flat compared to those of the previous quarter. That would still represent growth of more than 25% over the first quarter of 2021, but it would mark a slowdown in its growth rate.
There are catalysts coming that should reignite that growth rate, however. Nio's first ET7 luxury sedans should begin shipping this week. The midsize ET5 will follow that later this year. And the company will reportedly be using the ET7 to launch a new semi-solid-state battery that will have a 621-mile (1,000-kilometer) range on a single charge. Industry follower CnEVPost reported that Nio has an agreement with Chinese battery supplier WeLion New Energy Technology to supply the hybrid solid-liquid electrolyte battery.
Today's stock gains come even as COVID-19 lockdowns are being announced in China. While that is affecting Nio competitor Tesla with a four-day shutdown of its Shanghai factory, Nio has not yet had to curtail production because of that issue. With new products coming and plans to further expand in Europe this year, investors are taking last week's dip as a reason to buy today.
