What happened
Nio (NIO -5.00%) reported increasing losses in its second-quarter earnings report this week, but investors are shrugging that off, sending shares soaring Friday morning. After jumping as much as 10.9%, shares of the Chinese EV maker remained 10.1% above Thursday's closing price as of 10:50 a.m. ET.
So what
Nio's quarterly report wasn't all bad news for investors. Although its profit margins have been on a downward trend, new models being launched could turn that around in the coming years. That longer-term outlook, along with some positive economic data out of China today, are working to boost Nio shares.
Image source: Nio.
Now what
Consumer prices in China increased at a slower pace than many expected in August, and producer inflation sank to the lowest level since February 2021, reports Reuters. The Consumer Price Index (CPI) rose 2.5% year over year, slower than 2.7% in July and also below the 2.8% expected by forecasters. That data helped drive Hong Kong's Hang Seng Index more than 2% higher on Friday, with Nio and other manufacturers contributing to those gains.
Lower inflation and raw material prices should help Nio boost profit margins in the coming months. The company cited a "significant increase in battery costs" as one factor hurting margins in the second quarter.
Investors likely see the economic data as giving China's central bank room to lower interest rates to spur economic growth. With Nio stock down 44% for 2022 entering today's trading, today's market action indicates some think the shares have hit a short-term bottom. That may or may not be true, but the longer-term outlook also looks better for Nio, with its new models potentially making it a good time to enter the stock.
