Why Nio shares are up more than 20% this week

Nope (NO 12.11%) stocks rose this week. China has a plan to accelerate growth, and the electric vehicle (EV) maker could be a big beneficiary. But even before China’s economic stimulus has an impact, there are signs that Nio’s business is in better shape.

Investors recognized that this week and pushed Nio shares up about 24% as of late Friday morning, according to data provided by S&P Global Market Intelligence.

Green shoots for electric vehicle demand

US-listed Chinese stocks got a big boost this week as China’s central bank eased monetary policy and offered fiscal support to businesses and consumers. Steps taken to boost lending, support the housing market and give homeowners more spending money should give the strong EV market even more of a tailwind.

Chinese consumers will get a break from existing mortgages, and those savings could be spent on popular domestic electric vehicle offerings. As the government also promises to help the struggling real estate sector and increase tax support if needed, investors are looking to get into electric vehicle names before business results improve.

Nio has already announced deliveries of over 20,000 vehicles in each of the past four months for the first time. Investors hope to see that streak extended when the company reports September results next week.

At least one Wall Street analyst following the EV leader adze thinks the company will beat expectations when it reports its third-quarter shipments next week. In a report on Friday, Wedbush analyst Dan Ives said his firm believes Tesla will report as many as 470,000 electric vehicle deliveries for the quarter. General expectations are for 460,000 units.

Last year, about a third of Tesla’s vehicle sales came from China. Its factory in Shanghai is the largest. A bounce back from a slower first half of the year would bode well for Nio as well. If China rebounds, Nio shares could have more room to run even after this week’s sharp peak.