What happened
Shares in Nio (NIO 5.46%) have been getting crushed recently, tumbling more than 25% in just the last five trading days. That's come as investor concern has grown over production delays, supply chain challenges, and the potential for its U.S.-listed shares to be delisted. But some of those uncertainties are being clarified today, helping shares pop nearly 7% early Wednesday. The stock gave back those gains, however, as the broader market reversed course. As of 1:22 p.m. ET, Nio shares had moved down 2.2% for the day.
So what
Shares backtracked as the growth and technology sector lost steam today, but the news that boosted the stock early remained. One of the biggest headwinds has been related to the potential for its American depositary shares (ADSs) to be delisted by U.S. regulators. But Nio announced today that it is proceeding with a secondary listing that could benefit ADS holders, too.
Image source: Nio.
Now what
Today, the company announced that its plans for a listing on the Singapore stock exchange are progressing, and it expects shares to begin trading there on May 20. Importantly for ADS owners, these shares will be "fully fungible with the ADSs listed on the NYSE," the company said. This takes some of the risk away from U.S.-based ADS holders as those shares could be exchanged for those on the main board of the Singapore exchange.
On the operational front, as COVID-19 lockdowns in several Chinese cities have disrupted supply chains, many auto manufacturers, including Nio, have seen production impacted. But word came from Tesla CEO Elon Musk yesterday that the production delays are easing for his company's Shanghai factory. At a virtual conference yesterday, Musk said, "I had conversations with the Chinese government in recent days and it's clear that the lockdowns are being lifted rapidly."
As evidence that Tesla's Shanghai plant was back operating, industry follower Teslarati reported that the company recently exported its first shipment out of Shanghai since production resumed, and the first batch since March. That implies that Nio's suppliers are also probably back in operation, and its production should be ramping back up as well, bringing more positive news for Nio investors.
