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Why Nio Stock Jumped 13% Today

By Neha Chamaria - Jun 14, 2022 at 11:12AM

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Investors are buying the dip in Nio stock ahead of an important product launch.

What happened

Nio (NIO -4.62%) stock made a dramatic U-turn this morning after yesterday's plunge and has popped 13.5% as of 10:55 a.m. ET. Although the markets remain choppy, investors in the electric vehicle (EV) stock are excited about an event coming up tomorrow, June 15.

So what

Nio will hold a product launch event tomorrow, and although the company hasn't specified what product will hold the spotlight, it should be its ES7 SUV. Nio released a teaser video of the new model today, giving a sneak peek into its camera and lidar sensor system.

It's an important event, as Nio has been postponing ES7's launch since April amid COVID-19 restrictions in China. ES7 will be Nio's sixth EV and is a mid-to-large-size five-seater SUV, between the ES6 and ES8.

That may raise concerns about market cannibalization, where the new product could eat into the demand for existing ones instead of creating fresh demand for the company. ES7, though, is smaller than ES8 and will likely be priced higher than ES6. Pricing could make all the difference here, which is why it's important to note what Nio announces tomorrow.

Note that ES6 is also Nio's lowest-priced trim and made up the bulk of its deliveries in the first quarter. Adding a more expensive model, therefore, could also help Nio bump up its average selling prices in the coming quarters, provided the new model receives a warm reception from consumers. Importantly, Nio is expected to start deliveries of ES7 crossover as early as August