4 Catalysts Moving Nio Stock On Monday

Shares of Nio Inc - ADR NIO were trading lower Monday as China deals with surging COVID-19 cases and Nio announced it is forming a committee to investigate recent short seller allegations.

Regulatory Pressures: Nio investors had several different headlines likely moving the stock on Monday.

Related Link: Nio Analyst Dismisses Short Seller Allegations: Why They're Bullish On Chinese EV Stock

First, Chinese stocks were pressured by the latest round of COVID-19 breakouts in parts of China. China has implemented a strict zero-COVID policy, and investors are concerned about the potential for another round of full lockdowns in major Chinese cities to weigh on the economy.

In addition, Alibaba Group Holding Ltd - ADR BABA and Tencent Holdings ADR TCEHY were hit with yet another round of antitrust fines, suggesting the ruling Chinese Communist Party remains determined to limit the power and growth of its largest tech companies.

Related Link: Rivian Shares Jump 10% After Reaffirming Production Guidance, But Here's Why Analysts Remain Skeptical

Nio Responds To Short Seller: Nio announced on Monday that it will form an independent committee to investigate allegations by short seller Grizzly Research that Nio is playing "accounting games to inflate revenue and boost net income." The Grizzly report was released in late June, and Nio has said it "contains numerous errors, unsupported speculations and misleading conclusions and interpretations."

Finally, Bank of America analyst Ming Hsun Lee hosted a conference call with Nio management on Monday to discuss details of the company's strategic outlook. In a new note, Lee said Nio is on track for a number of product launches and updates between now and the end of 2024.

Management said Nio has increased its daily production capacity from 400 units to 600 units, and orders for both the ES7 and ET7 have been strong.

"NIO is targeting EBITDA to break even in 4Q23, with a quarterly delivery of over 100k units, similar to what its rival Tesla achieved previously," Lee said.

Nio also said it expects to transition to profitability in 2025.

Bank of America has a Buy rating and $31 price target for Nio.

Benzinga's Take: The Bank of America report suggests Nio's underlying business is booming as it ramps up production, rolls out new vehicles and pushes toward profitability. Yet Nio's stock may continue to struggle from outside pressures, including short sellers and its own government.

Photo courtesy of Nio.