Why Nio stock continued to rise today

Shares of the Chinese electric vehicle (EV) maker. Nope (NYSE: NIO) they flew recently. Nio’s US storage shares were up 11.1% as of 3:50 PM ET today. That brings the five-day increase to 38%.

That move was sparked by Nio’s promising Q2 earnings report last week. And the positive momentum continued today, after the company received an upgrade from one Wall Street analyst and a very bullish label from another.

Nio’s “Positive Catalyst Clock”.

When Nio reported its second-quarter results late last week, it showed a strong improvement in its gross profit margin compared to the first quarter and beat analysts’ expectations with third-quarter shipments and revenue guidance.

After shipping a record 57,373 electric vehicles during the quarter, the company said it expects to ship between 61,000 and 63,000 electric vehicles in the third quarter. That led JP Morgan analyst Nick Lai to improve Nio’s stock and significantly raise his firm’s price target.

Lai now thinks investors should buy Nio stock and sees the stock reaching $8 per share. That’s an increase from its previous target of $5.30 per share and would represent a gain of nearly 50% from recent levels. His reasoning is that operating cash flow will turn positive for the rest of 2024, which should eliminate the need for Nio to raise fresh capital. Nio ended the second quarter with about $5.7 billion on its balance sheet.

At the same time, City Group analyst Jeff Chung opened a 30-day “reverse catalyst clock” on the stock. That designation means he believes Nio’s stock is on the verge of rising. He also cited the increase in gross profit margin as a key reason, it reports at Barron’s.

Whether it was the encouraging quarterly report or the support from Wall Street analysts, investors jumped into Nio stock. The stock may continue to rise if the company continues to show real progress in achieving profitability.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Howard Smith has positions in Nio. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

Why Nio Stock Continued to Rise Today was originally published by The Motley Fool