What happened

Nio (NIO -2.02%) stock has been turbulent recently, and for good reason. After a big dip yesterday on mounting fears of how the spread of COVID-19 will hurt Chinese consumers and the economy, Nio staged a comeback Tuesday morning.

The shares rose as much as nearly 5% in early trading but couldn't hold those gains. That was because of news of a data breach from the company. After losing that early jump, Nio's American depositary shares were holding on to a gain of 0.7% as of 12:50 p.m. ET. 

So what

There wasn't any breaking news today related to how the COVID-19 virus spread is affecting the citizens and economy of China. That situation will continue to play out, and that might continue to make stocks of U.S.-traded Chinese companies volatile. However, more company-specific news has impacted Nio today. The company announced a data breach that could hit not only its reputation, but also its finances. 

Blue Nio ET5 profile view coming off production line.

Image source: Nio.

Now what

Nio announced it just found out that "certain information of users and vehicle sales in China before August 2021 was sold on the internet by third parties for illegal purposes." Nio touts itself as not just an electric car company, but also a technology and lifestyle brand. Its Nio House and Nio Life products aim to expand its brand and user community. Its smart vehicles include its own NOMI voice recognition, autonomous driving technology, and other technology-based comfort features. 

So the data breach comes as a hit to its reputation, but it also could affect its financial performance going forward. In the company's response, it said it has "undertaken the responsibilities for the loss that the users may incur in connection with the data leakage."

Investors don't know what that really means yet, but it seems investors are taking a cautious approach, as the stock gave back its early gains on the news today.