What happened
Chinese electric-vehicle (EV) maker Nio's (NIO 8.72%) stock price declined again on Wednesday, sliding to end the day down nearly 3%. The shares continue to suffer from the company's latest guidance cut, which came at a generally bearish time for the EV sector.
So what
Even a fairly positive new research note from an analyst couldn't keep the bears away from Nio. Before market open on Wednesday, Morgan Stanley prognosticator Tim Hsaio reiterated his overweight (read: buy) recommendation on the stock, with a price target of $16.10 per share. That's 64% higher than its present level.
In his new take, Hsaio shrugged off concerns about the guidance cut. He wrote that it "might dampen NIO's stock performance, but shouldn't trigger sharp sell-off, in our view, as the fallout from China's reopening should be sectorwide and likely transitional."
He's referring to the recently announced relaxation of the country's strict anti-COVID measures, which among other things will eliminate contact tracking and widespread quarantines.
Now what
For investors, however, the latest news from Nio overshadowed any potential benefit from the liberalization of the Chinese economy. That guidance cut was concerning, as it was steep. The company now expects to deliver 38,500 to 39,500 vehicles in the fourth quarter, but as recently as mid-November, it had guided for 43,000 to 48,000.
Yet Hsaio has a point in saying that the opening of the Chinese economy could provide a spark for the EV maker. Depending on how positively it affects the nation's workforce and consumers, it has the potential to supply a real lift for both Nio's production output and its sales.
