Tesla rival Nio is on a tear since its debut, but market watchers are cautious

Shares of Nio, the Shanghai-based Tesla rival, have surged since debuting in the public market last week, but some investors are cautious, noting the stock has fallen from its post-IPO high.

Nio shares are up 49 percent since the company's initial public offering on Sept. 12. Mark Tepper, president and CEO of Strategic Wealth Partners, said he's wary about the company's sustainability even though there's "incredible upside for both the company and also for the entire electric vehicle industry."

"Nio's got a nice little niche carved out with their SUV line," Tepper said Thursday on CNBC's "Trading Nation." But he's concerned about the costs of its outsourcing of assembly.

"I think if you have speculative capital that you want to play with, there's enough investor hype around this space, and investor hype can lead to big profits," he said. But he added, he doesn't see that now.

From a technical standpoint, a stock trading for just over one week has yet to establish any meaningful tend. So Craig Johnson, chief market technician at Piper Jaffray, found it helpful to examine what shares of Tesla did in the days following its debut in summer 2010.

"You can see that your traditional trading typically happens, where you get the pop, you get the pullback. Nio has pulled back about 50 percent [since its post-IPO highs]; Tesla actually pulled back below its IPO price. Right now, for this stock, you're probably going to have some further backing and filling and stabilization as both buyers and sellers really start to understand the story here with the stock," Johnson said Thursday on "Trading Nation."

The stock will likely see more of this "sideways consolidation," Johnson said, but will ultimately look for a move higher.

Nio shares closed 3 percent higher on Thursday, at $8.78 per share, but were down more than 2 percent Friday.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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