Stock in the Chinese electric vehicle maker
is continuing its remarkable comeback, cracking $50 for the first time since March. Expectations that delivery numbers for the second quarter will show things in China are getting better faster than expected, among other factors, appear to be giving the stock a lift.
NIO (ticker: NIO) stock traded as high as $50.61, up 2.4%, early on Tuesday. The stock is up about 29% over the past month, crushing comparable returns of the
Dow Jones Industrial Average.
It has been a bouncy ride. Coming into Tuesday, shares have dropped 10 times in June and risen 10 times, with an average daily gain of 4.3%. The average drop is about 1.7%.
Those data points show what has happened, but they doesn’t help investors know why NIO is rallying. A combination of hope regarding deliveries, broader moves in the stock market, and optimism over NIO’s competitive position, could be behind the move.
One key fact is that April and May EV sales in China rose about 200% and 170% year over year, according to Mizuho analyst Vijay Rakesh. The solid growth shows that the global semiconductor shortage that was hampering global auto production is easing. It also means NIO and its peers will have an easier time meeting their forecasts for second-quarter deliveries.
NIO said in early June that it expected to deliver 21,000 to 22,000 vehicles in the second quarter.
Another positive factor is that growth stocks are suddenly back in favor. The
home to many richly valued tech stocks, is up almost 6% over the past month, besting the Dow by more than 6 percentage points.
Finally, the money manager Navellier & Associates wrote Monday that NIO was poised to out-
((TSLA)) Tesla in China. “I’m convinced another [EV] company will eventually displace Tesla as the biggest manufacturer of EVs in China,” wrote Louis Navellier in an email to clients. “The reality is that [NIO] is on the verge of dominating the EV market in China and Hong Kong.”
Navellier believes NIO offers leading autonomous-driving features and can benefit from the support of the local government. That vote of confidence from an existing investor helps explain Monday’s move, but NIO stock was up a lot for the month before then.
It is a volatile stock. Even after the June rally, NIO shares are still up just 2% year to date. The stock is up 40% over the past three months, but down about 25% from the January 52-week high of almost $67 a share.