Momentum has been building in Nio's (NIO -0.12%) electric vehicle (EV) business, but the stock itself has been facing headwinds that have held it back. Some of those headwinds may be abating, and investors are pushing Nio shares up Monday as a result. After popping 9% to start the trading week, Nio American depositary shares were still 8.2% higher as of 11:05 a.m. ET.
There are reports that Chinese regulators intend to make it possible for U.S. regulators to audit Chinese companies, which could prevent Chinese shares from being delisted from U.S. exchanges. With that news, investors seem to be getting past that overhang in many U.S.-listed Chinese names, including Nio. Those reports, along with underlying company progress, prompted UBS analyst Paul Gong to upgrade the Chinese EV maker to a buy recommendation today. Investors are taking notice and juicing the stocks gain today.
Gong lowered his price target on the stock, but the new $32 per share price would still represent a 46% gain over Friday's closing share price. The analyst wrote that the 44% drop in Nio shares over the past year offers investors a good level to buy, Thefly.com reports.
Gong also feels that sales volumes should accelerate as Nio begins deliveries of its three new products this year. That includes the ET7 luxury sedan that began shipping last week, as well as the ET5 mid-size sedan, and ES7 SUV that should also stoke sales when they become available. Nio will also be launching its next-generation technology platform with these new models.
The growth catalysts for Nio's business aren't new, but the stock price hasn't reflected the growing potential partly because investors fear U.S. regulators could add Nio to a growing list of Chinese names that could face delisting from U.S. stock exchanges. Bloomberg reported over the weekend, however, that a change being sought by Chinese regulators would allow the access to audit data that the Securities and Exchange Commission (SEC) is requiring. The potential removal of that headwind has investors taking Gong's advice and buying Nio today.