When electric vehicle seller Nio (NYSE:NIO) posted strong delivery numbers in July and lower quarterly losses, investors ignored the good news. IT turned out Nio stock consolidated in the $14 range throughout most of August. Last week, shares exploded higher, rising 31%.
Why?
Ahead of the share split, which creates no value but increases liquidity, Tesla (NASDAQ:TSLA) touched new highs last week. Investors do not want to miss out on the EV boom on the stock market. Compared to TSLA stock, Nio looks cheaper at face value. In reality, Nio earns no profits yet. When its competitor, Xpeng, trades publicly, it could either mark an end to the EV hype or might sustain market interest.
Xpeng will sell EVs starting at $21,804. This is lower than Nio vehicle costs. Still, Nio announced a battery leasing program that will lower the price of Nio EVs. The network will also add convenience for consumers who need a quick battery swap. This is more affordable and convenient than waiting to get an EV charged.
On Aug. 27, Nio took advantage of the rise in its share price by selling 75 million shares. Even after the 7% drop last Friday, investors earned an easy 31% gain for the week. The cash infusion will allow Nio to spend on capital costs, expand the business, and invest in marketing and research and development.
Nio stock may dip heavily next. Watch for the stock to bottom.
Tech Insider
