Nio (NYSE: NIO) The shares, which until yesterday were holding up well since September’s breathtaking rally, reversed course this morning, falling 10% within minutes of the market opening. Shares of the Chinese electric vehicle (EV) maker were trading just over 7% lower as of 11:30 PM ET on Tuesday.
There’s nothing wrong with Nio. Chinese stocks tumbled across the board today, and Nio was no exception. After all, it is one of the leading EV manufacturers in the country.
However, as an investor in Nio, you don’t have to fear the current share price decline and can even view any decline in Nio as a buying opportunity.
Chinese stocks rise and then fall
Last week, China’s top economic planner, the National Development and Reform Commission (NDRC), held a press conference and announced stimulus measures to boost the economy. The move surprised many and investors saw it as the perfect opportunity to snap up Chinese stocks, many of which were languishing. Expectations ahead of today’s NDRC event were high, awaiting more details and a larger stimulus package.
However, investor enthusiasm quickly faded this morning after NDRC failed to release details. The Hang Seng Index On Tuesday, prices fell more than 9%, posting the biggest intraday drop since 2008. Nio was one of many Chinese stocks that collapsed.
Why You Should Buy and Hold Nio Stock
The NDRC may not have announced much today, but that doesn’t mean the government is backing off its stimulus plans. It said it was “fully confident” of achieving its full-year growth target and plans to distribute 200 billion yuan, or nearly $28 billion, to local governments and particularly support the real estate market.
There are no quick fixes, but any boost to consumer spending should boost the manufacturing sector, including the auto industry. Nio is already working on its growth plans. Nio just reported record third-quarter deliveries, expects auto margin to improve significantly to 15% by the end of 2024, launched its first mass-market brand Onvo, expects the L60 SUV to be a hot seller, and plans to launch a new model every year under Onvo to target the mass EV market. The EV stocks remain a buy-and-hold in my book.
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Neha Chamaria has no positions in the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Nio Stock Dropped 10% Today was originally published by The Motley Fool
