Shares of Nio (NIO -1.24%) dropped 3.5% yesterday after disappointing guidance from a competitor. But investors seem to be having second thoughts today as Nio itself gets closer to providing an update of its own. Shares jumped 4.9% as of 11:20 a.m. ET on Wednesday, gaining back all of Tuesday's losses.
On Tuesday, fellow Chinese EV maker XPeng disappointed investors with a second-quarter report that showed a wider net loss than expected. But investors also focused on the company's guidance for third-quarter deliveries, which were significantly short of expectations.
Nio investors reacted to what XPeng said about its struggles to overcome continued challenges presented by impacts of COVID-19 in China. But further analysis showed some of what is pressuring XPeng's vehicle sales might not be applicable to Nio.
In a conference call for investors, XPeng CEO He Xiaopeng said that it's not just virus-related issues that will slow sales in the third quarter. After second-quarter deliveries nearly doubled year over year, the company told investors to expect growth of no more than 21% compared to the 2021 third quarter.
Seasonal factors and the upcoming launch of new models were also blamed for XPeng's disappointing guidance. But Nio might not have those same issues. Deliveries of Nio's flagship ET7 luxury sedan are well underway, with the company saying this week that it has already shipped that model to the European market.
Nio plans to grow its business in Germany, the Netherlands, Denmark, Sweden, and Norway this year. The ET7 is a key part of that plan, and will soon be followed by the midsize ET5 sedan. Investors will hear more from management tomorrow when it holds its annual general meeting. But today, investors seem to think that there might be better news coming from Nio than from its Chinese competitor.