What happened

Plenty of things have gone wrong for Nio (NIO -1.81%) shareholders recently. But the stock jumped 7.2% Wednesday morning after one analyst said he believes the worst is over. Nio's American depositary shares were still higher by 6.4% as of 10:30 a.m. ET. 

So what

This year was supposed to be somewhat of a breakout year for Nio. It began sales of its first sedan models and expanded broadly into the European market for the first time. But production delays have been caused by supply chain constraints as well as COVID-19 lockdowns resulting from China's "zero-COVID" policy. Those restrictions have also impacted consumer demand in China. But Deutsche Bank analyst Edison Yu said he thinks the worst is over and 2023 will be Nio's breakout year. 

Now what

The problems created by China's COVID-19 restrictions haven't been isolated to Nio. But they come at a time when investors expected the company to approach profitability. Instead, the company has reported increasing losses in the last two quarterly periods. Its net loss reached about $580 million in the third quarter. That's up from $410 million in the second quarter and $280 million in the first quarter of 2022. 

But Yu thinks the worst might finally be over. In a note shared by Barron's this week, he points out that Nio has two new models coming in the first half of 2023. Yu also is assuming that China will pivot from the strict COVID-19 policy. He pointed toward fourth-quarter delivery data as being a key for investors to watch. After hovering around 10,000 per month recently, Nio should deliver about twice that in December to signal the turnaround. 

Considering the recently rising COVID-19 cases and lockdowns in China, investors should beware that Yu's assumption regarding that policy could be wrong. That said, Nio is positioned to grow its business once the COVID-19 situation in China normalizes. No one knows when that will be, and an investment in Nio will require patience and long-term thinking