Nio's Stock Continues Strong Run: How Long The Rally Will Last?

Chinese electric vehicle maker Nio Inc – ADR NIO is off to a great start this year, thanks to a strong third-quarter performance and solid deliveries reported for the fourth quarter.

Turnaround Stokes Rally

The stock is in the midst of an eight-session winning streak, ending Friday's session at $4.67, up about 50% from an intra-day low of $3.13 reached Jan. 8. It's now at its highest level since last May.

Nio on Dec. 30 reported a third-quarter beat. The cost cuts implemented by the company also came in handy. Subsequently, the company reported record delivery numbers for its fourth quarter, recovering from the summer lull.

The rally was alive last week amid rumors and subsequent confirmation that the cash-strapped company would receive fund infusion from Chinese automaker GAC Group. The stock is higher yet again Tuesday despite negative catalysts such as the outbreak of the coronavirus in China.

See Also: Nio Analyst Says Fundamentals Have Bottomed Out, Valuation Reflects Sales Momentum

Is Nio a Safe Bet?

After the drubbing the stock received in 2019, Nio investors are wary about the prospects despite the green shoots of revival.

Given the Chinese economy is recovering from the soft patch and the U.S.-China trade impasse is slowly being resolved, it's worth taking a second look at Nio. EV adoption is set to grow in the world's second-largest economy, which claims the top spot in terms of EV production and sales.

If Nio provides evidence it can raise finances and use it judiciously, while also focusing on deliveries, it could evolve as a force to reckon with the EV industry.

Upcoming catalysts that could make or break the stock could be news on potential outside financing and its fourth-quarter results, which are likely to be released in early March.

Nio's stock traded higher by 9.2% to $5.10 per share at time of publication.