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Why Nio Stock Soared Again on Monday and Could Keep Rising

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Why Nio Stock Soared Again on Monday and Could Keep Rising

Nio (NYSE: NIO) Shares are down nearly 30% so far this year. But anyone who has recently bought shares in the Chinese electric vehicle (EV) maker has done quite well. Nio shares are up more than 65% in the past month.

The stock continued to rise again today as the trading week began. Nio’s U.S.-listed U.S. shares were up 12.7% as of 10:15 a.m. ET. Part of the recent spike came from China’s latest plan to stimulate its struggling economy. But news that Nio has secured a new injection of capital from strategic investors in China has shares moving today.

Strong orders for Nio’s new mass market brand

The company announced that three strategic investor partners will do so invest the equivalent of nearly $500 million in Nio Chinathe company’s main operating unit. Nio will also contribute cash for newly issued shares of Nio China, bringing the total cash injection to almost $2 billion.

Nio will then hold a stake of more than 88% in Nio China, while the other existing investors will own almost 12% of the shares. While Nio ended the second quarter with approx $5.7 billion in cash on the balance sheetIt is expected to burn an average of about $1 billion per year over the next two years as it works to increase production volume and sales.

A big move the company recently made was the launch of a new, family-oriented, mass-market brand. The first model of the Onvo brand was delivered last week. The company said its mid-size L60 family SUV “has received much stronger order intake than expected.”

Nio may provide more information about the Onvo brand when it reports September vehicle delivery results tomorrow morning. Nio has delivered more than 20,000 electric vehicles for four consecutive months, and investors likely expect this streak to continue.

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Howard Smith has positions in Nio. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has one disclosure policy.

Why Nio Stock Soared Again on Monday and Could Keep Rising was originally published by The Motley Fool

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