Why Nio Stock Rallied Monday

Key Points

• Nio is setting itself up to help withstand growing competition.

• One Wall Street analyst thinks a recent capital raise was a smart move.

• Nio issued new shares after a sharp run-up in the stock.

• 10 stocks we like better than Nio ›

Nio (NYSE: NIO) stock jumped today, after one Wall Street analyst boosted his price target on the China-based electric vehicle (EV) maker. It also comes about one week after Nio announced it was raising $1 billion in fresh capital.

Nio shares soared as much as nearly 10% in morning trading, and still held on to a gain of 4.3% as of 2:28 p.m. ET.

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Image source: Nio.

Nio gets a bigger cash cushion

Last week, Nio announced it would be issuing new shares to raise about $1 billion. The company noted that the money would be used to invest in research and development (R&D) for EV technology in its smart vehicles, as well as growing its battery swapping and charging network, and to bolster its balance sheet.

In a report released late last week, J.P. Morgan analyst Nick Lai restated a "buy" rating on Nio and issued a price target of $8 per share, according to reports. That represents a 29% gain from where Nio's American depositary shares (ADRs) closed Friday afternoon.

Lai highlighted that last week's capital raise would be helpful for the stock. On the surface, issuing stock and diluting existing shareholders can be looked at as a negative development.

Lai explained his reasoning this way:

Fundraising should help the company in an extremely competitive EV market in China, although the timing of the issuance is somewhat a surprise right after Nio's recent 2Q25 result release, when management highlighted its robust product pipeline and profitability turnaround in Q425.

Nio's share issuance was done after a sharp run higher in the stock. Nio shares have soared about 45% over the last month, which included its quarterly report and news that August EV deliveries hit a record high.

The reasoning by the analyst makes sense, as does today's move higher in that regard. Nio still has to achieve profitability in a competitive EV market, though, so many risks remain with Nio stock.

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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.