Why Nio Stock Jumped 32% in November

Investors are buying Nio stock before 2022 ends as they believe the worst is over for the electric vehicle maker.

What happened

After taking a deep dive in October,Nio(NIO6.60%)stock bounced back just as dramatically last month, ending November with a solid 32% gain, according to data provided byS&P Global Market Intelligence. Theelectric vehicle (EV) stockis already up around 4% so far in December.

So what did Nio do right last month to win back investors' confidence? The EV stock received several analyst downgrades in November, but investors are focusing elsewhere as Nio prepares for 2023.

So what

With COVID-19 lockdowns gripping China and forcing Nio to suspend operations in October temporarily, all eyes were on the EV maker's third-quarter numbers and guidance for the rest of the year.

Nio's deliveries and revenue jumped 29% and 33% year over year, respectively, in Q3. But what made a difference was its outlook for Q4: Nio expects record deliveries in Q4, projecting almost 92% year-over-year growth at the higher end of its guidance range. It also expects revenue to climb by almost 75% to 94% in Q4.

However, while a drop in its margins and higher losses in Q3attracted a slew of analyst downgrades, investors in Nio stock saw a chance to buy the stock after the company's numbers and outlook proved Nio was unfazed by COVID-19 disruptions and confident about its growth plans.

CEO William Bin Li highlighted Nio's successful launch of its midsize sedan, the ET5, in September and its expectations that the sedan will contribute significantly to the company's revenue growth in Q4. He also stressed that Nio is now focused on resolving supply constraints and reducing delivery wait times for its customers.

Some additional mentions from management during Nio's Q3 earnings call were worthy of investors' attention. For instance, Li is confident that the ET5 will give BMW Series 3 in China a run for its money and surpass the popular premium sedan's sales within a year.

Management also spoke in length about Nio's plans for 2023, which comprise five product launches in the first half of the year, including aTeslaModel Y rival. As new launches boost revenues, Nio expects its selling, general, and administrative expenses to stabilize in 2023 and beyond.

Now what

Nio reporteddeliveries for November earlier this month and said it's on track to accelerate production and deliveries in December. At a company event this month, Li also spoke about the company's plans to build its own semiconductor chips and batteries in the long run and hinted at the companybreaking even in 2024.

With China easing COVID restrictions in between mass protests, investors in Nio who have watched the stock fall rapidly since September have foundample reasons to buy the EV stock ahead of 2023.

$NIO Inc.(NIO)$