Nio(NYSE: NIO) shares are down almost 30% so far this year. But anyone who bought stock in the Chinese electric vehicle (EV) maker more recently has done quite well. Nio shares have soared by more than 65% over the past month.
The stock continued to surge again today as the trading week started. Nio's U.S.-listed American depositary shares had gained 12.7% as of 10:15 a.m. ET. Some of the recent spike came from China's latest plan to stimulate its struggling economy. But news that Nio has secured a new capital injection from strategic investors in China has the shares moving today.
Strong orders for Nio's new mass-market brand
The company announced that three strategic investor partners will invest the equivalent of almost $500 million in Nio China, the company's main operating unit. Nio will also contribute cash for newly issued shares of Nio China that will bring the total cash injection to nearly $2 billion.
Nio will subsequently hold a more than 88% interest in Nio China while the other existing investors will have nearly 12% ownership. While Nio finished the second quarter with about $5.7 billion in cash on its balance sheet, it is expected to burn about $1 billion per year on average over the next two years as it works to increase production volume and sales.
One big step the company recently took was to launch a new, family oriented, mass-market brand. The Onvo brand's first model began deliveries last week. The company said its mid-size family L60 SUV has received "an order intake far stronger than anticipated."
Nio may provide more information on the Onvo brand when it reports its September vehicle delivery results tomorrow morning. Nio has delivered more than 20,000 EVs for four straight months, and investors likely expect that streak to be extended.
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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 a disclosure policy.
