|Bid||114.60 x 1100|
|Ask||114.63 x 800|
|Day's Range||114.37 - 115.60|
|52 Week Range||106.80 - 271.08|
|Beta (3Y Monthly)||1.58|
|PE Ratio (TTM)||8.96|
|Earnings Date||Jul 29, 2019 - Aug 2, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||165.59|
This week, the pair announced they have renewed the sales partnership withoutrevealing how revenues are divided between the two and when the extendedagreement expires
Baidu, Inc. (NASDAQ: BIDU ) and Snap Inc. (NYSE: SNAP ) have renewed their Asia sales partnership , which first began in May of 2017. The agreement authorizes Baidu to act as Snap’s representative to advertisers ...
Baidu, Inc. and Snap Inc. announced today the renewal of their sales partnership, which first began in May 2017. The agreement authorizes Baidu to act as Snap’s representative to advertisers in Greater China, Japan and South Korea.
(Bloomberg) -- The car industry is reinventing the wheel to prepare for autonomous vehicles.Japan’s Sumitomo Rubber Industries Ltd., whose roots stretch back to when Henry Ford was building his Model T, is developing a “smart tire” that can monitor its own air pressure and temperature, and eventually respond by itself to changes in road conditions.Yet it’s more than just tires that are being changed. Koito Manufacturing Co., AGC Inc. and Lear Corp. are putting semiconductors and sensors inside headlights, glass and seats to make them as intelligent as the cars driving themselves.Alphabet Inc.’s Waymo LLC, Intel Corp.’s Mobileye NV and Baidu Inc. dominate the core technology for autonomous driving, yet suppliers still count on finding their own space in the business. Parts for advanced driver-assistance systems and autonomous driving are expected to become a $57 billion market within a decade, according to BIS Research, and old-school companies born during the early days of the automobile know they must either adapt or risk extinction.“Autonomous driving is a challenge for carmakers, but it’s a bigger challenge for conventional parts makers,” said Zhou Lei, a partner at Deloitte Tohmatsu Consulting in Tokyo. “They are striving to become the ‘five senses’ of the vehicle so they can remain relevant.”Carmakers have disclosed more than $14 billion in investments in autonomy and mobility companies since 2010, according to data compiled by BloombergNEF. Toyota Motor Corp. tops that list at about $3 billion.Though the deployment of highly autonomous commercial fleets isn’t expected to begin until at least 2022, the looming threat is that the increasingly sophisticated designs of those cars will render some ordinary parts –- and their suppliers -- unnecessary.For example, why would a self-driving vehicle that uses cameras, lasers and sensors to get around need headlights or mirrors?Smart HeadlightsThe response from century-old Koito Manufacturing is to reinvent the headlight. The Tokyo-based company, which traces its roots to making lenses for railway signal lamps in 1912, is adding sensors and artificial-intelligence chips to lamps it plans to introduce by about 2025.Positioned on the four edges of the vehicle, the lamps will be able to process information and react, such as by illuminating poorly lit crossings, signaling pedestrians that it’s safe to cross and raising an alarm to surrounding drivers by flashing a specific color.The company’s current customers include Toyota, Volkswagen AG and General Motors Co., according to data compiled by Bloomberg.“Autonomous driving will change the role of lamps,” said Yuji Yokoya, who recently retired as executive vice president of the Tokyo-based company. “We see them not just as lamps, but more as corner modules.”Tokyo-based automotive glass-maker AGC is re-imagining that product and making it part of a vehicle’s communication system.Window AntennasThe company, founded in 1907 as Asahi Glass Co. Ltd., is designing windows with built-in antennas for 5G wireless connections, allowing cars to send and receive signals with other vehicles and infrastructure. AGC’s customers include Toyota, Tesla Inc. and Sony Corp., according to data compiled by Bloomberg.An overarching challenge is to convince carmakers that the smarter -- and more expensive -- components make economic sense. Not all parts manufacturers need a radical transformation to keep up with autonomous and electric vehicles since they’ve been evolving gradually as the industry takes shape, said Deepesh Rathore, an independent automobile analyst based in Bengaluru.“A car is a car, and the shape of the tire doesn’t change,” Rathore said. “I can imagine some of those companies having to reinvent everything -- especially those working with engines and gearbox technologies.”Even components that aren’t facing an immediate existential threat are evolving. Sumitomo Rubber is researching tires that can transmit data about road conditions to the car as well as to other vehicles.Smart Tires & SeatsThe next step will be a tire that automatically adapts to road conditions. When the tire detects water, it will change the structure of its surface into one that is optimal for wet roads, said Kozaburo Nakaseko, an official in the research and development division of Sumitomo.“Tires need to become smarter,” Nakaseko said. “We cannot move into an autonomous car society without information about the roads we drive on.”The innovations aren’t just limited to Japan. In the U.S., Lear Corp. is equipping its car seats with biometric sensors to detect stress, drowsiness and changes in heart rate, and then activate treatments in response. The seats also can transmit data to a doctor or family member if necessary, the company said.Other functions include controls that let users create individual “micro-climates” where they are sitting, and noise-canceling features in the headrests, the Southfield, Michigan-based company said.“All the mechanical stuff will just slowly go away, and there is a lot of electronics coming in instead,” said Egil Juliussen, principal auto analyst with IHS Markit. “You have to change in order to survive.”\--With assistance from Mei Futonaka, Anurag Kotoky, Indranil Ghosh and Gabrielle Coppola.To contact the reporters on this story: Ma Jie in Tokyo at email@example.com;Nao Sano in Tokyo at firstname.lastname@example.org;Masatsugu Horie in Tokyo at email@example.comTo contact the editors responsible for this story: Young-Sam Cho at firstname.lastname@example.org, Ville Heiskanen, Michael TigheFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Nio (NYSE:NIO) is on fire. Since late June, Nio stock has risen by close to 65%. This offers welcome relief to NIO shareholders who have seen little else but decline since the stock launched its IPO in 2018.Source: Shutterstock Still, despite the improved sentiment, production remains low, and losses continue to mount. The better-than-expected sales numbers may stoke optimism. However, the conditions that turned NIO into a penny stock remain in place. NIO Benefits From a Dramatic TurnaroundNio stock saw nothing but pain from March to June. A spike in the stock price took NIO briefly past the $10 per share mark in early March. However, a "greater than anticipated" slowdown cited in their earnings report took the Nio stock price down by more than 20% in a single day and more than 11.5% in the following trading session. From there, NIO saw a steady slide, falling to below $2.50 per share by last June.InvestorPlace - Stock Market News, Stock Advice & Trading TipsOver the last two weeks, sentiment has shifted dramatically. The latest surge in the stock came when the company reported a "greater than anticipated" number of deliveries. As a result, the stock has risen substantially from the $2.50 per share range where it traded in late June. Now, with the Nio stock price hovering close to $4 per share, many wonder if now is the time to buy NIO.In fairness, some optimism has returned to the market. Its much larger American counterpart Tesla (NASDAQ:TSLA) has risen by more than 30% since early June. The China Passenger Car Association also reported a 4.9% increase in sales. This is the first such increase in about one year. The Rally in Nio Stock Is Unlikely to HoldHowever, none of this changes the fact that analysts project nothing but losses for the foreseeable future. Yes, I did not see the surge in Nio stock coming recently. However, I predicted NIO would tread water, but little else. I stand by that sentiment.For one, it remains a small player. Our own Tezcan Gecgil points out that Chinese companies produced 254,000 electric vehicles (EVs) in the first quarter of 2019. Nio produced just under 4,000 of those cars.Gecgil makes good points that may ensure its survival. The company has backing from the likes of Baidu (NASDAQ:BIDU) and Tencent (OTCMKTS:TCEHY). It also remains true that pollution guidelines in places such as Beijing and Shanghai make it challenging to obtain licensing for non-electric vehicles.However, judging by the company's financial statements, that survival could come at a high cost to holders of Nio stock. Nio lost just over ¥2.65 billion renminbi ($390 million) in the previous quarter alone. Its ¥7.45 billion renminbi ($1.08 billion) in cash will not last long at that rate. Moreover, with ¥9.25 billion renminbi ($1.35 billion) in short and long-term debt, they have little room left to borrow.Hence, its backers will probably want more stock in return for funding. While the increased stock price helps with fundraising, the stock dilution will hurt current shareholders. The Bottom Line on Nio StockDespite the optimism surrounding Nio stock, Nio remains a troubled company struggling to survive. Indeed, improved sales bode well for the company. The suffocating pollution in China's large cities also helps drive sales in the EV industry.However, despite a slight uptick in sales, Nio stock will likely post losses for years to come. Moreover, with cash levels likely to fall, and debt burdens becoming increasingly heavy, the company will probably have to issue more stock to stay in business.Given the push for cleaner energy, EVs are likely here to stay. However, to earn investment returns in this industry, established car companies and even Tesla stock offer safer options. With better choices out there, and the risk that the latest move amounts to a dead cat bounce, I see no reason to buy Nio stock.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell for an Economic Slowdown * 7 Marijuana Penny Stocks That I May Buy * 7 of The Best Schwab ETFs for Low Fees The post Investors Should Not Expect Nio Stock to Keep Cruising Higher appeared first on InvestorPlace.
Today, China released its trade data for June. China’s dollar-denominated exports fell 1.3%, while its imports in US dollar terms fell 7.3% last month.
(Bloomberg) -- In a packed ballroom in Beijing’s national convention center, the executive from a major technology company laid out ambitious plans for the future of artificial intelligence in China. He explained how customized semiconductors would help power everything from autonomous cars to voice-activated industrial machines.Only this wasn’t a state-backed enterprise. This was Intel Corp., the largest U.S. chipmaker.The company’s AI chief, Naveen Rao, pledged to work closely, “engineer to engineer," on cutting-edge technology with the 7,000 people that attended Baidu Inc.’s annual developers conference last week. Intel was the top sponsor of the event.Rao made no mention of politics, though his overwhelming support of Baidu, a Chinese national tech champion, sent a powerful message: Even as U.S. and Chinese leaders are locked in a fierce battle over technological supremacy, companies like Intel remain big backers of China’s tech industry because they rely on the country for significant contributions of revenue, production chains and even talent.Intel made 27% of its revenue in China last year, more than in the U.S. or any other market, but it’s fighting to hold on to customers there that it spent decades cultivating. Like many American multinationals with large businesses in the country, Intel is walking a fine line between holding on to that lucrative market and keeping in Washington’s good graces. Neutrality is becoming a tougher stance to maintain."There’s been a psychotic break” in what some leaders in the U.S. government want and what American businesses want, said Josh Dorfman, founder of One Thousand Million, a China-focused consultancy and think tank based in Dallas. "Unlike in China, U.S. companies aren’t beholden to the country and are not obligated in any way, shape, or form to be patriotic. They want to make money."An Intel spokesman said the company remains engaged with Chinese customers that aren’t on the U.S.’s list of those it sees as a security threat. China is a substantial market for Intel and it has no intention of pulling out now.Intel isn’t alone. Apple Inc. is heavily dependent on China not only for the manufacture of Mac computers and iPhones but it’s also a major consumer market, accounting for about 20% of sales. Even as U.S. President Donald Trump threatened tariffs that would hit Apple products, the California-based company was making plans to shift production of its new Mac Pro computer to China, sending a clear signal of support.While some companies are considering moving part of their production out of the country, many others are making gestures of goodwill. Walmart Inc. last week pledged to invest $1.2 billion in China to upgrade logistics distribution centers. Boeing Co. is in negotiations to sell 100 jetliners to Chinese airlines in one of its largest-ever deals, Bloomberg News reported. And last month, 600 U.S. companies and trade groups signed a letter to Trump warning of tariff-related hits to their businesses.IBM’s Greater China group chairman Liming Chen said that the escalation of China-U.S. trade frictions has created a "confusing environment" for businesses. He outlined International Business Machine Corp.’s long relationship with China, dating back to its products first entering the country in the 1920s, and formally establishing a Shanghai office in 1936."IBM has participated in the rapid development of China over the past 40 years, while China has also nourished IBM," he wrote in a post on WeChat in June, calling the country an "indispensable part of our global strategy map."The U.S.-China trade war is anchored in competition to dominate the next generation of wireless networks and other technologies as much as politics. The Trump administration worries that American companies in search of profits could actually help China’s tech industry eclipse U.S. prowess in sensitive areas like artificial intelligence and machine learning.The chairman of the U.S. Joint Chiefs of Staff, Joseph Dunford, lambasted Alphabet Inc. in March for Google’s AI work in China, which he alleged "indirectly benefits the Chinese military." Trump repeated the critique in a subsequent tweet, questioning the Google parent’s loyalties. Google has said it doesn’t work with China’s military.The same nationalistic fervor is partly behind the Commerce Department’s May prohibition on selling American components to Chinese telecom behemoth Huawei Technologies Co. Despite Trump’s recent pledge to ease restrictions, Huawei remains on America’s so-called entities list and U.S. firms must apply for special licenses to sell parts to the company.That hasn’t stopped chipmaker Micron Technology Inc. from feverishly trying to find ways to keep supplying the company, one of its largest customers. The U.S. semiconductor industry also lobbied the Trump administration to loosen restrictions on Huawei.Still, American tech companies are facing a new global reality. They may no longer be able to overlook geopolitics in favor of profits. China may not be the growth savior it once was.Tech companies "must now live in a world where their Chinese business partners and global value chains at any given day could blow up," said James Lewis, director of the tech and public policy program at the Center for Strategic and International Studies, a Washington think-tank. “Trump might have backed off Huawei for now but next week it could be something different and any of these companies are fair game.”Lewis, who previously served as the U.S. Commerce Department’s lead for national security and espionage concerns related to high-technology trade with China, said Chinese firms are also racing to become less reliant on the very American firms bending over backwards to keep their business.Splitting the two economies won’t be easy. Research, development, manufacturing and talent in the U.S. and China are still very much interconnected."Innovation by American companies is fueled by access to the Chinese market," said Samm Sacks, cybersecurity policy and China digital economy fellow at think tank New America, in Congressional testimony in May.For Intel’s AI chief, collaboration with China helps the company to build better products and bring new technology to market fast.“I’m proud of the strong and growing partnership between Intel and Baidu,” Intel’s Rao said in Beijing, after greeting developers with a hearty “nihao.” “By working together to advance AI, Baidu and Intel are helping to usher in a world where AI is ubiquitous.”\--With assistance from Gao Yuan.To contact the reporters on this story: Shelly Banjo in Hong Kong at email@example.com;Zheping Huang in Hong Kong at firstname.lastname@example.org;Ian King in San Francisco at email@example.comTo contact the editors responsible for this story: Peter Elstrom at firstname.lastname@example.org, Molly SchuetzFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Tencent Holdings Ltd. is pressing China’s top smartphone vendors and app stores to boost the cut of revenue it gets from games sold through their platforms, people familiar with the matter said, stepping up efforts to claw back profits as its business slows.The social media giant is seeking as much as 70% of the sales generated from its games, up from just 50% now, said the people, who requested anonymity discussing private negotiations. That would bring Tencent’s portion in line with the proportion shared with game publishers on other platforms, including Apple Inc.’s iOS store and Google Play, which each keep 30% of revenue that comes from apps. Negotiations vary from platform to platform, and Tencent may not be asking as much from each app store operator, the people said.Tencent is keen to shore up its bottom line as growth in China, the world’s No. 2 economy, decelerates, sapping consumer spending on entertainment and hurting advertising. The company’s gaming division -- its largest -- was battered in 2018 by a series of regulatory crackdowns and in May, Tencent reported the smallest increase in sales since going public in 2004.At the same time, Tencent has gained leverage in negotiations because the pipeline of new games has shrunk, the result of Beijing’s clampdown on what it views as gaming addiction among youths. Fewer than 5,000 new games will be approved this year, versus more than 8,500 in 2017, Asia-focused gaming researcher Niko Partners estimates.Tencent “is likely to gain stronger bargaining power against its distribution channels,” Citigroup analysts led by Alicia Yap wrote in a research note this week.The social media titan initiated talks in recent weeks with most of the country’s largest app stores, run by leading smartphone makers such as Oppo, Lenovo Group Ltd. and Xiaomi Corp., as well as internet outfits such as Baidu Inc. and 360, the people said. Tencent is focusing on only a subset of its games at present, they added. But if the 70-30 split becomes the standard, that could translate into billions of dollars of additional revenue annually.Tencent dominates the market thanks to its all-purpose WeChat app, which serves more than a billion people, and a development machine that consistently cranks out hits such as Honour of Kings and Peacekeeper Elite. Now, the company is taking advantage of its heft -- its closest rival is the much smaller NetEase Inc. -- to pressure app distributors to cough up more revenue, the people said.P.H. Cheung, a spokesman for Tencent, didn’t immediately respond to an email and text query on the company’s plans, which were previously reported by gaming industry media outlet Gamelook. Baidu and Oppo declined to comment.Those negotiations are by no means all one-sided. If anything, Tencent may have to work hard to change the status quo. The country’s four biggest smartphone names -- Oppo, Vivo, Huawei Technologies Co. and Xiaomi -- run app stores for their users that together account for about 40% of market share.Among the new titles Tencent wants a bigger revenue cut on is role-playing mainstay JX Online 3, developed by China’s Kingsoft Corp., and Crazyracing Kartrider, a mobile remake of a popular title from South Korea’s Nexon Co., one person said. As of now, neither title is available on stores operated by Oppo and Vivo, suggesting those two device-makers have yet to agree to Tencent’s proposal.App developers and publishers compete to get games listed on those stores, whose operators host in-game payments for things such as virtual goods, character skins and power-ups. In return, developers get a cut of that revenue. Unlike in the U.S. and Europe, where a 70-30 split is common, revenue-sharing varies hugely across different Chinese stores but is commonly pegged at 50%. Furthermore, that cut is usually negotiated directly with each of the stores, sometimes on a game-by-game basis.What’s in the app stores’ favor is the sheer volume of competition. While Google Play is blocked in China, there are approximately 400 Android app stores, though many have an extremely small number of mobile users. The country’s app stores focus especially heavily on games because that’s where the money is -- many don’t even levy a cut of revenue at all on non-gaming apps.\--With assistance from Lulu Yilun Chen.To contact Bloomberg News staff for this story: Zheping Huang in Hong Kong at email@example.com;Gao Yuan in Beijing at firstname.lastname@example.orgTo contact the editors responsible for this story: Tom Giles at email@example.com, Edwin Chan, Colum MurphyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
This morning, US index futures surged after Federal Reserve Chair Jerome Powell’s testimony raised the possibility of a near-term cut in interest rates.
(Bloomberg) -- China’s largest technology companies are gunning for YouTube’s biggest stars.The Qingteng Club, a group affiliated with social media and gaming giant Tencent Holdings Ltd., will host executives and celebrities from the Chinese and U.S. online video industries at a private event in California this week, according to attendees. The event, dubbed the East-West Forum, will take place at an Anaheim hotel down the street from VidCon, a convention for fans of online influencers.Tencent, owner of the all-purpose Chinese app WeChat, is trying to encourage more U.S. social-media stars to do business in the world’s No. 2 economy. The opening panel of the event is titled “How Tencent could help your influencers’ businesses in China.” They have an edge over YouTube in tapping the burgeoning market: The Google-owned video service is blocked in the country.The resurgent interest in American content coincides with a period of intense competition in the world’s largest online arena. The popularity of Douyin, China’s equivalent of TikTok, has shaken China’s technology industry, and companies like e-commerce giant Alibaba Group Holding Ltd., search leader Baidu Inc. and Tencent have been forced to defend their turf.Tencent, whose WeChat messaging service is used by a billion-plus people, has previously blocked links to Douyin. And IQiyi, a Netflix-style streaming service controlled by Baidu, is working on a competing app.“East-West Forum is an exclusive event that brings leaders in tech and entertainment industry together from east and west to meet, to learn more about each other and build potential collaborations,” according to a statement by the Mars Summit, an organization helping to host the event.Fan GatheringSome of the biggest names in Chinese social media are descending upon California this week as tensions with Washington run high over the Asian country’s technological ascendancy.Executives from TikTok, owned by Bytedance Ltd., Tencent and Baidu are all speaking on panels at this year’s VidCon, which started as an event for people who post videos on YouTube to meet with fans. Celebrities sign autographs and host panels, while executives give keynote speeches. The convention has since expanded to include online platforms such as Amazon.com Inc.’s Twitch, Facebook, Instagram and Twitter.The East-West Forum will also bring together executives from Tencent, the founders of Chinese startups RED and Bilibili Inc., and online influencers Jordi and Azzy. It’s also expected to attract U.S. media executives from Fine Brothers Entertainment, which operates some of the most popular channels on YouTube.“There is a very large, very senior delegation of Chinese executives at VidCon,” said Jasper Donat, a media executive and producer based in Hong Kong. “The fact that that’s happening is pretty big. It’s been hard to get a lot of China into America in recent years, and they are here in force.”To contact the reporter on this story: Lucas Shaw in Los Angeles at firstname.lastname@example.orgTo contact the editors responsible for this story: Nick Turner at email@example.com, Edwin ChanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Today I'd like to discuss the outlook for Nio (NYSE:NIO), a closely followed stock in China's expanding luxury automotive sector. On Sep. 12, 2018, Nio stock went public in the U.S. as an American Depositary Receipt (ADR) at an opening price of $6.Source: Shutterstock At the time Nio stock was widely touted as the Tesla (NASDAQ:TSLA) of China. After reaching an all-time high of $13.80 in two days following its listing, Nio stock has been on the decline for the past 10 months.Many of our readers are now wondering whether July may offer a good entry point into NIO shares, which are currently trading around $3.2. Here is a candid look at the the prospects for Nio stock so that potential investors may decide if the shares should belong in their long-term portfolio.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Nio Is a Relatively Young CompanyThe Shanghai, China-based company develops, manufactures, and sells premium semi-autonomous electric vehicles (EVs) to luxury buyers in China. It was founded in 2014 and currently has office in China as well as the U.S., the U.K. and Germany.The initial backers of Nio included Baidu (NASDAQ:BIDU), Tencent (OTCMKTS:TCEHY), and Xiaomi Corp as well as Singapore Government's sovereign wealth fund, Temasek Holdings.The group initially focused on research and development (R&D) activities, but went into mass manufacturing in March 2017. Its first volume-manufactured seven-seater SUV vehicle -- the ES8 -- was sold in China in June 2018. At the time it was compared to Tesla's Model X.Prior to its IPO, NIO stock reported revenues of only $6.7 million for the six months ended June 30, 2018, and no revenues in 2017. In other words, the car manufacturer was awash in red ink, a fact that would have made the company ineligible to list in a Chinese stock exchange.As part of rather lengthy and strict listing requirements, Chinese stock exchanges would have required Nio to have been profitable over the three years prior to the proposed IPO date. In other words, Nio could have not listed in China and possibly chose the U.S. due to easier listing requirements for ADRs.In hindsight, investors who bought Nio stock since its IPO may now be wondering whether the company completed the IPO way too early in its history. Instead should the company have focused on building market share and raising cash through venture capital? Chinese Booming EV Market Is EvolvingChina is now the largest EV market in the world. With a population of 1.4 billion, the country has an important pollution problem in big cities.As part of its efforts to decrease pollution levels, in 2010, the Chinese government started introducing a range of subsidies to promote the sales of electric cars.In 2016, Chinese companies manufactured 375,000 electric cars, accounting for a 43% of the global EV market. Q1 2019 numbers from the country showed that the quarterly sales numbers for passenger vehicles reached 254,000 cars, an increase of 118% year-on-year (YoY).Tax incentives, various fee exemptions and other subsidies granted by the Chinese government have fuelled this market growth that has led to increased consumer demand.In addition, especially the inexpensive EV models enable Chinese consumers to easily obtain a vehicle plate which is otherwise extremely difficult to get in some cities such as Beijing and Shanghai. It is expected that by 2025 electric cars will have 50% market share in China.When we look back at the Nio IPO, it is easy to see why many investors would have regarded investing in the NIO stock as also participating in the future growth of the EV market in China.Let us now fast forward to 2019. As the industry has grown, the landscape in China has also become more competitive. There are currently over 500 Chinese EV manufacturers.Yet as the Chinese economy cools off especially amid the U.S.-China trade wars, analysts are wondering how many of these companies can actually survive, especially now that governmental subsidies are being cut down considerably.The government has also announced that foreign manufacturers now will be able to produce cars as wholly-owned foreign entities in China. Therefore companies such as Tesla, Audi, or General Motors (NYSE:GM) will not need to enter into a joint venture with a local manufacturer any more.Nonetheless, these foreign manufacturers are still likely to rely on the distribution networks of local companies.As of September 2018, China had 403 million drivers and 322 million motor vehicles in total (including 235 million cars). However, car sales in China declined last year; it was first contraction of the industry in over two decadesIn the next few years, hundreds of Chinese EV manufacturers will likely compete aggressively among themselves, possibly pushing profit margins down for all of them, including Nio. How Nio Stock Makes MoneyAt present, Nio sells exclusively in China. In addition to the ES8, the company has two other vehicles, the EP9 (two-seater sports car) and the ES6 (five-seater SUV).Nio cars are equipped with a standalone artificial intelligence ("AI") system called the NOMI. The company also offers various car charging and power solutions.It is important to highlight that management has been working hard to make the Nio brand more than a car manufacturer, but rather a life-style concept. For example, its showrooms also feature members-only areas, Nio Houses, that act as upscale social clubs. Nio management is aiming to appeal to the changing demographics of the Chinese car buyers who are more tech-savy and want more from the dealership experience.In addition, the group uses social media actively to engage with current and prospective customers. It also has an app with over 800,000 users as well as a virtual currency.On May 28, Nio reported Q1 2019 results and Wall Street was not impressed. The manufacturer's Q1 sales of $228.8 million had dropped 54.6% sequentially from Q4. Its gross margin was negative 13.4%, compared with positive 0.4% in Q4 2018.Management's May 2019 monthly delivery update early last month also drove home the concerns for "the challenging macroeconomic and Chinese auto market backdrop."Furthermore, Nio has recently had to recall 5,000 ES8 SUVs due to battery fires.And the group's quarterly cash burn of about $600 million is not likely to decrease in the next quarter. The issue of cash is one of the most important questions regarding Nio's fundamental story.Although the car company is going through cash at an alarming rate, Nio posted a smaller-than-expected Q1 loss. Its net loss stood at $373 million vs. what analysts had expected to be $472 million.On a final note that may excite investors, the ES6, which in effect is a smaller and cheaper version of the ES8, has begun delivery several weeks ago. Could this new vehicle also provide a much-needed sales spark for Nio in the coming months? So Should You Buy Nio Stock?Nio's Chinese name, Weilai, literally means Blue Sky Coming. Yet Nio's listing at the Big Board has failed to provide excitement and the stock has shed almost its 50% of its value since its September 2018 debut price. Those investors who have bought into NIO shares at about $13 have literally been feeling the blues.I am of the camp that Nio stock's price weakness since the IPO is a clear reflection of investor sentiment and major fundamental worries, especially regarding a young company with unproven management completing a rather premature exchange listing in a third country, i.e., the U.S., where it sells no cars.However, I do not expect that the major investors, such as Tencent, as well as the Chinese government will allow the company to go bust. For example, it is likely that Tencent may have plans to integrate its own voice assistant Xiaowei into Nio cars so that it can offer Tencent services in car displays for shopping or entertainment.Furthermore, Nio management has recently announced that the group will soon form a joint venture with Beijing E-Town International Investment and Development Co. Ltd which will invest about $1.5 billion in this new entity. Is the Chinese government in effect bailing out Nio?Although the details of the new JV is not known, I believe that it is an important step to help the company to reach a more viable point in its history.For example, China is also investing in the development of autonomous, or driverless, vehicles. A report by McKinsey highlights that China will lead the autonomous car market in the years to come. Could the Chinese government be encouraging Nio to develop the AI capabilities in Nio cars to address this market?In light of the recent cash injection by the Chinese government, it is likely that NIO shares have already seen a low for 2019. Nonetheless, investors should be wary of high expectations for the company.Daily volatility of Nio stock is high. Any headline news regarding the U.S.-China trade wars as well as sales or earnings figures from Tesla will affect the short-term price in Nio shares, too. In other words what is good for China or Tesla may also be good for Nio and vice versa.Potential NIO investors may consider hedging their stock purchases with, for example, Nov. 15 ATM covered calls. A similar (and continuous) hedge may also help current Nio shareholders, who do not yet think the Nio stock price will likely improve soon, recover some of their losses over time.Investors who are interested in buying into Chinese or clear energy companies, but do not want to commit all their capital to a single stock such as Nio may also consider investing in various exchange-traded Funds (ETFs) that have NIO as a holding, including iShares MSCI China ETF (NASDAQ:MCHI), Global X MSCI China Consumer Discretionary ETF (NYSEARCA:CHIQ), Invesco WilderHill Clean Energy ETF (NYSEARCA:PBW), or iShares Core MSCI Emerging Markets ETF (NYSEARCA:IEMG).As of this writing, the author did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Best Stocks for 2019: A Volatile First Half * 7 Simple Ways for Young Investors to Invest Their First $1,000 * 6 Stocks to Buy Based on Insider Buying The post Even as It Struggles, Nio Stock Shows Promise for the Future appeared first on InvestorPlace.
While the U.S. stock market is making fresh new highs, Chinese firms are not enjoying the fun. Chinese stocks remain mired in a bear market, and its tech companies are in a drastic slump. Not surprisingly, iQiyi (NASDAQ:IQ) hasn't been spared. In fact, IQ stock has lost more than half of its value over the past year.Source: Shutterstock Much of this is probably due to external factors. The trade war has scared American investors away from Chinese stocks in general. And China's economy is showing signs of strain. But iQiyi has some concerns of its own that could keep the stock in the doghouse in coming months. Is iQiyi To Fault For Its Massive Stock Price Losses?Chinese stocks have gotten absolutely hammered over the past year. There are 39 Chinese firms with a market cap over $2 billion that have been listed in the U.S. for at least a year.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Best Stocks for 2019: A Volatile First Half Of these, 24 (well more than half ) have lost at least 20% of their value over the past year. Only four out of the 39 have posted a positive return over the past year.IQ stock has been the biggest loser of the bunch, however, shedding 59 percent of its value over the past 12 months. Other notable peers have performed almost as bad, however.Weibo (NASDAQ:WB) is down 58 percent. Sina (NASDAQ:SINA) has plunged 52 percent. And even internet giant Baidu (NASDAQ:BIDU) hasn't been spared; it has knifed 55 percent lower. So IQ stock, while being the worst of a sorry bunch, is hardly an overwhelming outlier. iQiyi's Recent TumbleLike most tech stocks, IQ plummeted to end 2018. Shares recovered to start 2019, but that recent optimism faded in March. Since then, IQ stock has been going straight down again.In addition to the general concerns about the trade war and the health of the Chinese economy, iQiyi is facing two more direct concerns.The first of these is increased government regulation. The China National Radio and TV Administration "NRTA" recently issued more strict guidelines for China's major video players. These will sharply limit the amount of historical dramas that these companies can produce, in relation to dramas based on modern settings.The Chinese government suggested that the video companies were promoting false and harmful views of China's past with these dramas.While this may sound like a silly issue to western investors, it is something to take seriously. Even the most hyper-capitalist of companies must play by a different set of rules in China than they would in places that have more free speech protections.Additionally, it's worth noting that various other Chinese media companies listed in the U.S. have gotten in trouble with the Chinese government for concerns ranging from piracy to sexual content previously, causing sizable share price declines. The current issue with historical dramas will probably blow over. But IQ stock will always face the headwind of the possibility of a government content crackdown at any point.iQiyi also issued more than $1 billion in convertible bonds in March. At the time, it appeared to be a success for IQ stock. They raised money at a lower interest rate and at a less dilutive price than expected. It also represented the second largest convertible bond offering by a Chinese firm in the United States to date.Still, it also appears to have reminded investors that iQiyi has a troubling balance sheet and no plans to make profits anytime soon. When Will iQiyi's Business Model Turn The Corner?It's popular to refer to iQiyi as the Netflix (NASDAQ:NFLX) of China, but this analogy doesn't fully work. For one thing, Netflix relies almost exclusively on subscription revenues. iQiyi, by contrast, gets less than half of its revenues from paid subscriptions. At its price points of $3/month for monthly subscriptions and $2/month for annual subscriptions, iQiyi needs a whole lot of subs to turn a profit.Notably, iQiyi doesn't have the first mover advantage that Netflix did. Already, the Chinese market has three major players. iQiyi has more than 500 million monthly users (not subs), but so does Tencent's offering. Alibaba's (NYSE:BABA) Youku has more than 400 million as well.They all offer competitively subscriptions at super low price points. This makes it difficult for iQiyi to simply copy the Netflix model of raising the subscription price frequently.On the other hand, iQiyi shares a major similarity with Spotify (NYSE:SPOT) rather than Netflix. This is that it has a robust free option, and generates substantial advertising revenues from it.iQiyi, like Spotify, hopes free users will upgrade over time, but it's not a completely closed community like Netflix. Advertising, though down as a percentage of the pie, still made up 43% of iQiyi's revenues in 2018, with subscriptions at just 37%.The idea is that iQiyi will eventually have enough original content to be able to drive far more subscription revenue. At this point, iQiyi is spending nearly as much on content costs as it brings in in revenue. That's obviously not a sustainable model.The question is, will iQiyi be able to reach an inflection point where it starts earning a profit on its content? The fact that two well-funded rivals in Alibaba and Tencent oppose them make it very difficult to either lock up the market or raise prices aggressively. IQ Stock VerdictIf iQiyi can stay the course for quite a few years, it can become a huge winner. It trades far cheaper than Netflix and other streaming companies on a Price/Sales basis. The combination of aggressive revenue growth and an expanding valuation multiple could make IQ stock a home run.But it will be many years, if ever, until iQiyi reaches that point. Right now, the business is losing gushers of money. That's problematic as it faces entrenched rivals. How long will investors fund iQiyi's money-burning content strategy? If the company can keep adding subscribers quickly, IQ stock will eventually recover. But there's a decent chance it will continue to struggle for a long time to come.At the time of this writing, Ian Bezek held no positions in any of the aforementioned securities. You can reach him on Twitter at @irbezek. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Best Stocks for 2019: A Volatile First Half * 7 Simple Ways for Young Investors to Invest Their First $1,000 * 6 Stocks to Buy Based on Insider Buying The post Right Now the Future Looks Pretty Bleak for IQ Stock appeared first on InvestorPlace.
On Monday, major China-focused ETFs ended deep in the red on US exchanges. The iShares MSCI China ETF (MCHI) lost 1.24%.
Alphabet's (GOOGL) self-driving unit, Waymo plans to add complimentary Wi-Fi service in its robotaxis in a bid to increase its share in the autonomous driving market.
When a random man doused Baidu founder and chief executive Robin Li with bottled water earlier this month, the episode sparked multiple theories: maybe the perpetrator was a Luddite disturbed by a future of self-driving cars and smart speakers? Or perhaps the whole escapade was rigged to show off Mr Li’s cool demeanour? The rationale may have been lost on delegates — there was no audible answer to Mr Li’s “What’s your problem?”.