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Why Nio Shares Soared This Week and Could Keep Rising

Why Nio Shares Soared This Week and Could Keep Rising

Nio (NYSE:NIO) The stock has been on a roll over the past month. The Chinese electric vehicle (EV) maker’s U.S. depositary shares continued to advance this week with double-digit gains.

As of Friday morning, shares were 12% higher than last week’s closing price, according to data provided by S&P Global Market Intelligence. Some company news contributed, as did broader tailwinds. In fact, the strength of China’s electric vehicle market contributed to a more than 30% gain in Nio stock over the past month.

Nio Day 2023

Nio held its annual Nio Day event last weekend and the 2023 presentation impressed investors. The company has shown that it wants to continue increase its market share by presenting its new ET9 “executive flagship” sedan. With an expected price of around $112,000, the ET9 will propel Nio into the ultra-luxury market for the first time when it begins sales in 2025.

It also highlights Nio’s internal technology that it plans to use in its vehicle lineup. But Nio is not yet profitable and therefore needs capital to continue developing technologies and new vehicles. That’s where more good news came in for the company this week.

Be competitive in a growing market

Nio announced that it has completed a $2.2 billion equity investment from Abu Dhabi-based investor CYVN Holdings. CYVN has previously invested in Nio and now holds a roughly 20% stake in the electric vehicle maker. Commenting on the investment, Nio CEO William Li said: “With the improved balance sheetNio is well prepared to refine its brand positioning, strengthen its sales and service capabilities, and invest long-term in core technologies to navigate an increasingly competitive competitive landscape.

Competition is intensifying in China as demand for electric vehicles remains strong there. According to early data from research firm GlobalData, nearly 27% of vehicles sold in China in the third quarter were electric vehicles. This compares to about 8% in the United States.

Investors view a consolidated balance sheet and expanded vehicle lineup as good signs. As mentioned, Nio is not yet profitable, but there are signs that it will eventually get there. This helps explain the recent rise in Nio shares and why there could be more to come.

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Howard Smith has positions in Nio. The Motley Fool posts and recommends Nio. The Mad Motley has a disclosure policy.

Why Nio Stock Soared This Week and Could Continue to Rise was originally published by The Motley Fool

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