Investors are very fickle with risky China-based stock. After getting shaken out by holding Luckin Coffee (NASDAQ:LK), Nio (NYSE:NIO) traded in the $2.00 range for a while. But since June and at $4, the stock continued an incredible climb to over $9.00. Nio earned a higher valuation, especially after the company became dangerously close to running out of cash.
Nio, like Tesla (NASDAQ:TSLA), reported strong Q2 deliveries. It delivered a 179.1% Y/Y increase in vehicle deliveries at 3,740 units. CFO Steven Feng said that "Our deliveries in the second quarter of 2020 exceeded the high end of our earlier projection, and we are confident that our goals on gross margin and operational efficiency will be achieved."
Tesla’s factory build may enlighten China will a better understanding of EV manufacturing and would ultimately benefit Nio. If patriotic consumers consider a Nio over a Tesla EV, then Nio’s growth prospects will keep getting better.
Catching NIO on its way up may pay off for momentum investors. Those who missed the rally and did not hold the stock back at $2.00 - $5.00 will want to wait for a correction first. Sentiment may quickly shift the other way, so holding the stock at its peak would prove costly.
