Should You Buy Nio Stock, the 'Tesla of China'?
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In this holiday-shortened trading week of Thanksgiving, stocks still aren't giving bulls much to cheer about. It's been tough sledding, as many names are still near or hitting new lows.

Even FAANG stocks are in a bear market, leaving investors little place to hide during the onslaught.

That's why it's interesting to see some of the winners that are rallying despite the turmoil. The first is Tesla (TSLA) , the well-known California-based producer of all-electric automobiles. While shares are about flat on the month, Tesla stock is up almost 15% from the start of October and almost 40% from its lows last month.

That compares to the 7% decline for the PowerShares QQQ ETF (QQQ) so far this month and its 14.5% decline since the start of October.

Not many people would have predicted Tesla's outperformance, nor would they have predicted the outperformance of Nio (NIO) , the Chinese all-electric car maker that went public in September. Shares of Nio have been volatile since hitting the public markets, but are so far higher since the start of October and month-to-date. Respectively, shares are higher by 18.5% and 28.5% during those periods.

It's left investors wondering, should they buy Nio stock?

Had they listened to Real Money contributor James "Rev Shark" Deporre, investors would have been long the stock already. Timothy Collins, another Real Money contributor, has a new risk-defined options play for the name.


On Monday, notorious short-seller Andrew Left of Citron Research published a long thesis on Nio and made the case for shares to rally to $12 per share. "NIO's visionary management is revolutionizing the high-end auto industry in China," he wrote.

Should Nio get to Left's price target, we're talking about a return north of 55% from current levels.

Earlier this month, shares caught a lift after the company provided an update on its production results on Nov. 6. Nio just began producing its first electric car earlier this year, the ES8, and in the third quarter it was able to build just over 4,200 units. Overall, it delivered 3,268 of them. That led to $214 million in revenue, while management is guiding for $418.5 million to $436 million for the fourth quarter.

All of this was enough to push shares higher and that momentum has continued through the month. As long as the trend continues to hold, there seems to be little reason to bet against one of the few stocks that have the wind at its back, for the time being.

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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.

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