HomeTrading TipsReasons for Wednesday's Volatility in Nio Shares

Reasons for Wednesday’s Volatility in Nio Shares

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Nio (NYSE:NIO)

Over the past month, trading activity in Nio (NYSE:NIO) shares has been volatile, and that trend resumed Wednesday morning. In the first few minutes of trading today, the stock of an electric vehicle (EV) manufacturer in China rose by 2.8%, but it has since fallen nearly 3% below where it ended trading yesterday. The shares were trading 2.5% lower as of 11:11 a.m. Eastern Time.

Then what?

The positive and negative crosscurrents driving the stock recently have been evenly balanced by investors. Nio (NYSE:NIO) stock price dipped last week when a competing Chinese electric car manufacturer, XPeng, issued a pessimistic outlook for vehicle deliveries during the third quarter. An analyst with Deutsche Bank named Vincent Ha stated earlier this week that his company anticipates Nio’s deliveries during the third quarter to total a little more than 30,000 units. This suggests that August’s cargo numbers will be comparable to July’s. When Nio reports its August delivery data tomorrow, investors might have another opportunity to respond.

The COVID-19-related limitations still in place in several Chinese cities and the power curtailments resulting from a drought that has reduced hydroelectric output have contributed to negative sentiment. Both of these factors have impacted supply chains for businesses such as Nio. However, the government has also revealed plans for a new stimulus package this month to increase the amount of demand from consumers. Although there hasn’t been much of a shift from where Nio (NYSE:NIO) shares were a month ago to where they are now, there has been some up-and-down movement along the way.

What’s Next?

Ha and Deutsche Bank believes investors have already factored in a weaker sales report likelihood. The company is also looking forward to restarting growth due to introducing new models. Nio (NYSE:NIO) introduced the ES7, a mid-large size SUV, in June. The company aims to start shipping the ET5 sedan, a medium vehicle, at the end of September.

According to a report by an online media company, Ha continues to believe that the shares should be purchased, with the company setting a revised price objective of $39 (down from $45), representing a 100% increase over previous levels. Investors in Nio (NYSE:NIO) should pay attention to what the firm has to say about August deliveries tomorrow, but the additional context will be provided on September 7, when the company is slated to disclose its results for the second quarter.

Featured Image – Megapixl © Michaelvi

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