Shares of electric vehicle maker Nio Inc – ADR NIO are moving higher after the Chinese electric vehicle manufacturer's Aug. 20 announcement of a battery rental model.
Nio's Fundamentals Drive Upside: Nio is among the best-performing stocks of the year, gaining about 350% year-to-date.
The upside has been driven by an improving sales trajectory, especially after a COVID-19-induced slowdown. The company secured financing through a private offering and stock sale.
American rival Tesla Inc TSLA is up about 385% year-to-date.
BaaS Impresses Investors: The innovative business model of separating the battery from the vehicle, lowering the cost of ownership, has sat well with investors.
After showing a muted reaction on Aug. 20, the day of the battery announcement, Nio's stock took off and has gained about 27% in the time since.
What Nio Analysts Are Saying: The battery rental model will not only shore up the EV maker's top line, but also strengthen its competitive positioning, enhance its brand equity and lower the burden on its balance sheet, BofA Securities analyst Ming Hsun Lee said in a note.
The analyst has a Buy rating on Nio with an $18 price target.
On Tuesday, UBS analyst Paul Gong upgraded Nio shares from Sell to Neutral with a $16.30 price target.
Morgan Stanley also upgraded the shares from Equal-weight to Overweight and increased the price target from $12 to $20.50.
What's Next For Nio: Nio has also been sounding out a global expansion.
CEO William Li reportedly said the company plans a global foray in the coming years, targeting Europe in 2021.
Investor confidence in the company, which was once struggling to stay afloat due to a precarious cash position, should only improve if the company's fundamentals hold up.
NIO Price Action: At last check, Nio shares were adding 9.32% to $19.53. The stock hit an all-time high of $19.85 earlier in Wednesday's session.
Related Links:
Chinese EV Maker Nio Plans Global Expansion Starting With Europe Later This Year
Why Nio Has A Shot At Becoming The 'Tesla Of China'
Photo courtesy of Nio.
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