Why NIO Stock is down today

What happened

Shares of Chinese electric vehicle (EV) maker NIO (NYSE: NIO) were trading lower on Tuesday amid a large sell-off in EV shares, and despite strong selling results and an upgrade from a longtime Wall Street skeptic.

As of 10:30 a.m. EST today, US stocks in NIO’s custodian were down about 6.4% from Monday’s closing price.

So what

NIO was just one of a number of EV stock groups that traded lower on Tuesday. Most of them have seen strong bull runs in recent months; retirement comes as no surprise and, at least for now, probably shouldn’t worry long-term auto investors.

But in the absence of this sector pressure, NIO stock could otherwise be up on two good news items. First, it announced its November deliveries before the US markets opened on Tuesday, and they were strong: 5,291 vehicles delivered in November, a new monthly record and a sign that demand for the company’s premium electric SUVs has continued to be strong after his impressive third. trimester.

NIO built 5,000 vehicles in one month for the first time in October. It now aims to build 7,500 per month by the end of the year. Image source: NIO.

NIO’s recent results have convinced a longtime Wall Street skeptic. In a new note Tuesday morning, Goldman Sachs Analyst Fei Fang took NIO to a neutral level with a price target of $ 59, saying that NIO’s success in increasing the range of its vehicles, its battery-as-a-service program and the effects The Chinese government’s reshuffled incentives seem likely to maintain sales. longer and longer.

An upgrade to neutrality may not sound like much, but Fang previously valued NIO’s stock as a sell off, with a price target of just $ 7.70. It’s a big change for Goldman.

Now what

NIO also said it was trying to speed up an increase in production capacity that it planned to implement in early 2021.

This increase in capacity will allow NIO to produce approximately 7,500 vehicles per month. The company last upgraded its production line in September, increasing its monthly output from around 4,000 to around 5,000, but demand is already exceeding that increase.

CEO William Bin Li said during the earnings call last month that he hoped the increase will be in place by the end of January; NIO said today that it is now aiming for its production line and suppliers to reach that speed before the end of December.