Nio (NYSE:NIO) stock has been weak in recent weeks thanks to concerns related to China regulation. Long story short, the Chinese government has been cracking down on its own “Big Tech” companies that have been seeking fundraising in the United States via American exchange listings.
Ride-sharing platform Didi (NYSE:DIDI) has been at the epicenter of all of this, and the Chinese government recently removed the platform from Chinese app stores. This crackdown has had a negative ripple effect on all U.S.-listed Chinese stocks, including NIO.
NIO Stock Isn’t Like DiDi
Unlike other Chinese companies that have been hurting lately, Nio is actually on the good side of the Chinese government.
This is China’s “Tesla,” after all.
If China wants an opportunity to influence the global EV sector, they need Nio to succeed. They need Nio to be a raging, global success.
It seems like China knows this, as they’re doing everything they can to help this company succeed. This includes passing legislature to support the adoption of battery swapping in China, which is a core piece of Nio’s business model.
So, we see all the present regulation concerns as not pertaining to Nio. The Chinese government is very unlikely to bring the hammer down on Nio any time soon.
The Bottom Line on NIO Stock
And while this whole commotion is taking place, the fundamentals underlying Nio’s growth narrative are rapidly improving.
Nio reported June delivery numbers, and they were great. After two consecutive months of retreating, deliveries in June rose over 20% month-over-month. The growth narrative is back on track.
Simultaneously, Nio just laid out plans to expand its battery swapping station network to 4,000 stations by 2025, with over 700 of those to be installed in 2021. This is a huge expansion goal and emphasizes Nio’s desire to become a global EV player. Nio’s entry into the Norwegian EV market later this year will also bolster that global expansion narrative.
Plus, China’s economy is slowing, which is leading to lower interest rates and more accommodative money policy. In a roundabout way, this will actually boost auto sales by creating more favorable financing.
The next six to 12 months should be solid for Nio. We expect the stock to make a run for $70.