Nio Inc (NYSE: NIO) is making a run for the top in the market again this morning, following up on the recent gains seen from the stock. However, with no press releases or SEC filings, many are wondering why the stock is headed up. At the end of the day, it has quite a bit to do with competitor financial results mixed with a likely change in political climate. Here’s what’s going on:
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Competitor Financial Results Open Eyes to NIO Stock Potential
Electric vehicle manufacturers, including Nio of course, are hot on the market these days, and with strong recent financial results from a couple important players in the sector this subsector of the transportation space is gaining steam.
Most recently, Li Auto Inc. (NASDAQ: LI) released its quarterly financial results this morning. Not only did the report show compelling revenue growth, gross margins were up substantially, pushing the company closer to potential profitability.
The same was seen late Wednesday XPeng (NASDAQ: XPEV). Not only did the company genderate strong revenue and margin growth, it guided for a record fourth quarter ahead.
But these are competitors. What does all of this have to do with NIO?
Ultimately, with competitors in the electric vehicle market doing so well, there’s a clear increase in the demand for these products. So, whil LI and XPEV are NIO competitors, their success in the most recent quarter suggests that NIO will enjoy the same, an exciting concept for investors.
Presidential Election Results Further Support NIO Stock Growth
Competitor earnings aren’t the only factor driving growth in the value of NIO stock. A major factor here is the recent Joe Biden win of the presidential election in the United States. As a result, Biden will be replacing President Trump.
For the electric vehicle market, that’s a great thng. The same goes for Chinese companies. Here’s why:
- EV Market Biden Boost. President elect, Joe Biden, has a history of environmental awareness and is very outspoken opinion about the shift the world needs to make toward clean energy. With transportation being a major contributing factor to the increase of greenhouse gases, electric vehicles are likely to play a big role in the climate change efforts. As a result, electric vehicle manufacturers around the world will likely benefit from a Biden Presidency.
- U.S. & China Relations. The United States and China aren’t best of friends at the moment. A trade war that spanned the entire Trup presidency has tattered this relationship. However, Joe Biden is likely to reverse quite a bit of the action the United States has taken against China, ultimately improving the Chinese economy and creating opportunities for NIO and other Chinese companies.
The Bottom Line
The bottom line here is simple. The electric vehicles space is hot following the release of financial results from LI and KPEV. While both of these companies are Nio competitors, their results set the stage for what we can expect to see out fo China’s largest electric vehicle manufacturer.
Moreover, with Joe Biden taking the White House soon, trade war tensions between the United States and China are likely to dwindle while the global regulatory environment surrounding electric vehicles and other clean energy plays will likely brighten ahead.
All in all, NIO stock is one for the watch list given the change in environment.
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