Why Nio stock is down 10% today

Nope (NO -7.88%) The stock, which had held up well until yesterday since September’s stunning rally, reversed course this morning and fell 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 were tumbling today, and Nio was no exception. After all, it is one of the leading electric vehicle manufacturers in the country.

As a Nio investor, however, you don’t need to fear today’s drop in the stock price, and in fact, you can consider any drop in Nio a buying opportunity.

Chinese stocks rise, 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 take advantage of Chinese stocks, many of which are sluggish. Expectations have grown ahead of today’s NDRC event as more details and a bigger stimulus package await.

Investor enthusiasm, however, quickly died down this morning after the NDRC did not divulge any details. The Hang Seng Index fell more than 9 percent on Tuesday, its biggest intraday drop since 2008. Nio was among several Chinese stocks that fell.

Why you should buy and own Nio stock

The NDRC may not have announced much today, but that doesn’t mean the government is backing down on its stimulus plans. It said it was “fully confident” it would hit its full-year growth target and plans to distribute 200 billion yuan, or nearly $28 billion, to local governments and support the housing market in particular.

There are no quick fixes, but any stimulus to consumer spending should boost the manufacturing sector, including the auto industry. Nio, meanwhile, is already working on its growth plans. Nio just reported record third-quarter deliveries, expects its vehicle margin to improve significantly to 15% by the end of 2024, launched its first mass-market brand, Onvo, expects the SUV L60 to be a top seller and plans to launch a new model under Onvo every year to target the mass EV market. EV stock remains a buy and hold in my book.