Why Nio is Rising When Tesla is Falling

In the last month, Nio (NASDAQ:NIO) shares diverged positively from Tesla (NASDAQ:TSLA). Why? The short float on NIO stock is 7%, compared to 5% for Tesla.

Tesla’s CEO, Elon Musk, is getting negative news coverage almost daily. His tweets about bitcoin are disconcerting as Tesla continues to face headwinds. The CEO’s distraction with cryptocurrency is raising the risks of holding TSLA stock.

Musk may have embraced bitcoin in the last quarter to boost Tesla's electric vehicle sales. Millionaires who earned their wealth solely from bitcoin have nothing physically worthwhile to buy. So, if Tesla accepted the bitcoin payment, it should raise unit sales.

Tesla earned a nine-figure profit from bitcoin sales in the last quarter. The good news ended there. The CEO went against bitcoin, arguing its mining leaves too much of a carbon footprint. China banning Telsa EVs on the highway could have led to a sharp sales decline in the region.

Lost sales in China should lead to strong sales for Nio.

Markets bought shares of XPeng (NYSE:XPEV) and Nio in the last month in anticipation of the strong sales in China.

Li Auto (NASDAQ:LI) also rose, although the 31% short float suggests that Li stock will fade.

Nio stock is still a long way from the $65 high in Feb. The stock could re-test highs if the euphoria for the EV continues.