What happened

Nio (NIO 2.31%) stock was on a losing streak and had slumped 9.8% at its lowest point midweek. In just the last two days, though, the electric vehicle (EV) stock swiftly reversed course to recoup all of those losses -- Nio shares were trading flat for the week as of noon Friday.

Nio received at least three analysts' downgrades at the tail end of the week, but investors still bet big on the stock in anticipation of better days ahead for the EV maker.

So what

With COVID-19 lockdowns forcing Nio to shut down two plans in October, investors turned wary about the company's third-quarter performance and view about the rest of the year. The stock tumbled, with Deutsche Bank analyst Edison Yu even slashing Nio stock's price target to $20 per share from $39 a share ahead of earnings.

Nio, however, grew its deliveries by 29% and revenue by almost 33% year over year in the third quarter. More notably, Nio's outlook for the fourth quarter was a big surprise -- it expects to deliver 43,000 to 48,000 vehicles in Q4. That means Nio will ramp up production swiftly and is on track to deliver a record number of vehicles in November and December.

Nio's focus is on ET5, a midsize sedan that it started delivering on Sept. 30 and is getting strong orders for. During Nio's Q3 earnings conference call, CEO William Li emphasized how the EV maker isn't worried about the demand for ET5 and is instead focused on reducing the wait times for customers right now.

Now what

A back-of-the-hand calculation shows that Nio plans to deliver nearly 33,000 to 38,000 cars between November and December. Even at the lower end, that's a more than threefold jump from its October deliveries. Not many analysts are ready to bet on such a dramatic recovery yet, and that's one of the reasons why some downgraded Nio stock this week, according to The Fly, including:

  • Bernstein analyst Eunice Lee cut Nio's price target to $15 per share from $25 a share.
  • Mizuho analyst Vijay Rakesh cut Nio's price target to $34 a share from $40 per share.
  • Bank of America analyst Ming Hsun Lee cut Nio's price target to $15 per share from $16 a share.

Nio's outlook, big growth plans for 2023 that includes several launches, and news about China easing COVID rules on Friday, however, gave investors ample reasons to buy the EV stock.