What happened

Nio (NIO 0.38%) American depositary shares had plunged more than 10% this week heading into Thursday's trading session. But that slide reversed this morning, with the stock popping almost 5%. As of 11:00 a.m. ET, Nio shares were still trading higher by 3.3%.

So what

The recent decline came as investors sold many electric vehicle (EV) stocks due to fears of demand issues looking ahead to 2023 and beyond. Some of the drops may also be related to tax-loss selling after stocks in the sector -- including Nio -- plummeted in 2022.

Nio specifically dropped further this week after it quantified some of the demand problems investors feared. COVID-19 cases and restrictions put in place to stem to spread in China forced the company to lower fourth-quarter vehicle delivery guidance earlier this week.

Blue Nio ET5 sedan in a showroom.

Image source: Nio.

Now what

Nio delivered 31,607 EVs in the third quarter after averaging only about 25,000 for the previous three quarters. But the company had said it expected unit sales to soar to between 43,000 and 48,000 in the fourth quarter. Investors were hoping the fourth quarter would mark a turning point for Nio production volume levels.

This week, however, the company warned that the disruptions related to the coronavirus have impacted production and deliveries. It now expects deliveries to be in the range of 38,500 to 39,500 vehicles for the fourth quarter. Investors didn't like that bit of news, and shares have been dropping every day since that announcement -- until today. 

Today's bounce is likely from long-term investors looking at the bigger picture. With new models being launched and the company's expansion into Europe gaining traction, the fourth quarter slowdown shouldn't derail Nio's growth plans. Those investors seemed to want to take advantage of the recent decline, helping push shares higher today.