NIO Stock Soars After New SUV Revealed. Here’s Why.

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NIO

stock is gaining again after it revealed the ES7 SUV at a launch event Wednesday.

NIO stock has risen 4% to $19.45 at 11:01 a.m. Wednesday, and has risen 22% since Monday’s close, what would be its largest two-day gain since March.

Investors are excited about NIO’s new SUV, which splits the difference between its ES6 and ES8. It’s an important launch for the company, which has seen sales get hit–hard–by China’s Covid-19 lockdowns, while margins were squeezed by rising commodity prices. It will be vehicles like ES7, which should start shipping in August, and sedans like the ET7 and the ET5 that will be the key to getting sales back on track and helping to boost margins. If deliveries can increase from about 7,000 a month in May to 25,000 a month by the end of the year, it would “shift the narrative away from supply constraints to robust product supercycle,” writes Deutsche Bank analyst Edison Yu.

Yu also contends that the sentiment towards NIO, which has been terrible as the stock tumbled 50% from $31.68 at the end of last year to $15.99 on June 13, could be starting to turn. “Looking ahead, we can envision the stock outperforming in the 2H of the year at the very least on a relative basis,” writes Yu, who has a $45 price target on the stock, up more than 130% from its recent levels.

NIO isn’t the only EV stock rising on Wednesday. Shares of

XPeng

(XPEV) have gained 3.8%, while

Li Auto

(LI) has advanced 0.3%, and

Tesla

(TSLA) has risen 1.9%.

Write to Ben Levisohn at [email protected]