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Why NIO, China’s Tesla, Rose ~24% in January

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NIO’s January performance

Since NIO (NIO), popularly hailed as China’s Tesla, was listed on the NYSE in September 2018, it has seen wild roller-coaster ride.

In October and December 2018, NIO fell 15.5% and 17.4%, respectively. In contrast, the stock rose 30.7% and 23.7%, respectively, in November 2018 and January 2019. Let’s take a look at some key factors that drove its rally in January.

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NIO’s recent price rally

On January 10, NIO revealed that it had managed to beat its delivery guidance for the fourth quarter of 2018. In December 2018, the company delivered ~3,318 units of its seven-seat ES8 SUV (sport utility vehicle) to customers, up ~7.4% from November. In the previous month, it delivered 3,089 units, a solid 96.4% increase from its delivery of 1,573 units in October.

Earlier this year, NIO guided for the delivery of between 6,700 and 7,000 car units in the fourth quarter. With the help of solid November and December delivery figures, it delivered 7,980 units in the quarter, and it exceeded its upper guidance range by 14.0%. In the third quarter, NIO delivered ~3,268 units.

Currently, the Chinese automaker only offers one mass-production car: the ES8, which is an SUV like Tesla’s (TSLA) Model X. It’s important to note that NIO launched the ES8, its first mass-produced electric vehicle, in December 2017 and began deliveries on June 28, 2018. In December 2018, NIO launched its second electric SUV, the ES6, during its NIO Day 2018 event. The ES6 comes with a lower price tag than the ES8, and it’s a five-seat SUV compared to the seven-seat ES8. The company claims that the ES6 base model can deliver up to 410 km (~255 miles) and the high-end variant can deliver up to 510 km (~317 miles) in a single charge.

These positive updates, along with the broader market recovery in the United States, could be the primary reason why NIO stock surged ~24% in January.

In comparison, Chinese stocks (FXI) (MCHI) Tencent Holdings (TCEHY), Baidu (BIDU), and Alibaba (BABA) rose 13.0%, 8.8%, and 22.9%, respectively, in January.

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