3.3000 0.00 (0.00%)
After hours: 4:45PM EDT
|Bid||3.2900 x 28000|
|Ask||3.3000 x 39400|
|Day's Range||3.2600 - 3.4500|
|52 Week Range||2.3500 - 13.8000|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||5.42|
During the past few weeks, Chinese electrical-vehicle manufacturer Nio (NYSE:NIO) has been in the fast lane. Nio stock up about 40% or so to $3.50. Yet the shares are still well off their highs. The stock was more than $10 in late February. Click to Enlarge Source: Shutterstock It's also important to keep in mind that the company is a recent IPO. Yet it certainly hasn't enjoyed the enthusiasm of many other operators like Zoom Video Communications (NASDAQ:ZM), Anaplan (NYSE:PLAN) and Pagerduty (NYSE:PD).But hey, IPOs can certainly make nice comebacks, right? So with Nio stock, might there be one brewing? Or should investors be skeptical?InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Dependable Dividend Stocks to Buy A Closer Look at NioWell, there are certainly some positives. Keep in mind that the sentiment for Nio stock had gotten to horrible levels. Thus a bounce back is reasonable. And there was probably short covering (this is when short sellers buy back shares to cover their positions). As of late June, about 15% of the float for Nio was shorted.But there were also some fundamental factors at work. Perhaps the most important was that the second quarter saw a pick-up in deliveries, which came to 3,553. This was above the company's quarterly guidance of 2,800 to 3,200 (albeit, this forecast was fairly conservative). In June, NIO also launched its ES6 five-seater premium SUV and the results were encouraging. Deliveries were 413.But despite all this, there are still some negative factors, and I think they could easily outweigh the positives. For example, Nio recalled more than 4,800 units of the ES8 (or close to 30% of the total deliveries for the company's history). The reason: There were three battery fires. Nio Recall WoesIt's encouraging that Nio has been proactive. Let's face it, the auto industry can be resistant to recognizing problems. Yet the recall is still something that points to quality issues, which is never a good thing for a premium vehicle. It also does not help that there are already general worries about EVs.In fact, the company's business model, which relies on the manufacturing of the vehicles from another company, could be an issue. That is, there could be more vulnerability to quality issues as Nio does not have as much control.But there is something else about the business model: It means that the margins are quite low. In other words, it could be tough for Nio to realize the benefits of the economies of scale as the company grows. And yes, this could be limiting for the stock price.It also does not help that Nio continues to burn money. During the latest quarter, the operating loss was a hefty $366 million. But the cash on hand is only about $1.12 billion and the debt load is $1.35 billion.In light of this, it would not be surprising to see another equity raise - and this would mean more dilution for the stock. Bottom Line on Nio StockEven though the Chinese government has been cutting back on subsidies, there still is considerable support to promote the EV industry. This is definitely good news for Nio stock.But then again, the company has to fight fierce competitors like BYD (OTCMKTS:BYDDF) and Beijing Electric Vehicle Co. Consider that there are nearly 486 registered EV manufactures in China! So it will be tough to stand out. It also does not help that the Chinese economy is slowing down, despite efforts to stimulate growth.All in all, there's quite a bit of risk with Nio, and it's probably best to hold off for now.Tom Taulli is the author of the upcoming book, Artificial Intelligence Basics: A Non-Technical Introduction. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dependable Dividend Stocks to Buy * 10 Stocks Driving the Market to All-Time Highs (And Why) * 7 Short Squeeze Stocks With Big Upside Potential The post Nio Stock Isn't Cheap When You Factor in Competition and Recalls appeared first on InvestorPlace.
Call it a "cult stock" or a "controversy stock" if you'd like, but there are few things more often or passionately discussed on financial social media than Tesla (NASDAQ:TSLA) stock. Opinions on TSLA stock are like noses: everybody has one, especially among the financial pundits in the media.Source: Shutterstock The recovery of Tesla stock shares from $185 to $245 has some folks jumping on the bandwagon, but I'm not the type of person to follow the crowd, especially when my hard-earned capital is involved. In the case of TSLA stock, I see a number of reasons to remain cautious or even take profits if you've got 'em. Accolades? I'm Not ImpressedMuch ado was made over the fresh announcement that Motor Trend had named Tesla's Model S the "Ultimate Car of the Year," beating out similar offerings from Ford (NYSE:F) and General Motors (NYSE:GM). The way Motor Trend was gushing about the Model S, you'd think it's the greatest thing since sliced bread:InvestorPlace - Stock Market News, Stock Advice & Trading Tips"Seven years later, there still isn't another car that doesn't require a start button or key … The idea that a car would recognize your phone as you approached, unlock, boot up its computers, and be ready to operate and drive the moment you sat down and closed the door is still cutting-edge today."I tend to view this effusiveness as a way to sell copies of Motor Trend, not an instance of sterling journalism. With comparable vehicles from Ford, General Motors and Nio (NYSE:NIO), Motor Trend is behaving as if Tesla were still the only leading-edge electric vehicle manufacturer around, which is absolutely not the case in 2019. A Matter of TrustOverblown superlatives aside, the fact remains that if a company doesn't have their target demographic's trust, then they've really got nothing at all. And it seems that Tesla has broken that bond of trust, as evidenced by AMCI's newly released 2019 Trusted Automotive Brand Study (TABS). * 10 Stocks Driving the Market to All-Time Highs (And Why) As reported in the study, Tesla is now the third least trusted luxury automobile brand. This is significant because, as the AMCI study stated, trust accounts for more than 50% of a consumer's decision to repurchase or recommend an automotive brand or its dealers.Switching to a dealer-less business model likely played a part in this precipitous decline in consumer trust. It appears that Elon Musk's bold move away from the franchise paradigm may have backfired when it comes to building and maintaining trust: as AMCI Global Chief Strategy Officer put it, "Franchised dealers can do an excellent job of building trust if they use the right standards and practices." Analysts Aren't Buying ItHype tends to hit retail investors the hardest, but analysts aren't prepared to join Team Tesla stock just yet -- and frankly, I can't blame them for their skepticism. Credit Suisse analyst Dan Levy, for instance, has aptly pointed out that TSLA "still needs to work its way through another cut to the U.S. EV tax credit" -- a point often glossed over by overenthusiastic retail Tesla bulls.Also bearish is Bank of America analyst John Murphy, who explained that TSLA's roll-out of the lower-priced Model 3 "will likely pressure margins, profits, and cash flow." And UBS analyst Colin Langan, not to be deterred by the highly vaunted TSLA second-quarter earnings results, reported that "the Q2 delivery beat does not change our cautious view on Q2 earnings." The Bottom Line on TSLA StockWhen it comes to cutting-edge electric vehicles, Tesla isn't the only player in the game anymore and there are plenty of viable investment alternatives to TSLA stock.Frankly, I wouldn't blame anyone currently in the green on his or her TSLA stock position for shedding some shares now in anticipation of buying them back if and when the price revisits the sub-$200 level.As of this writing, David Moadel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dependable Dividend Stocks to Buy * 10 Stocks Driving the Market to All-Time Highs (And Why) * 7 Short Squeeze Stocks With Big Upside Potential The post It's Time to Wait for Lower Prices on Tesla Stock appeared first on InvestorPlace.
The development of electric-car racing—showcased in Brooklyn’s Red Hook neighborhood over the weekend—is an important signal to investors that electric powertrains for mass-market applications are here to stay.
There's an old Wall Street proverb that even a dead cat will bounce if tossed from a high-enough building. In Mandarin, dead cat bounce translates to Sǐ māo tantiao or 死猫弹跳. A Chinese example of such a rally is Nio (NASDAQ:NIO).Source: Shutterstock Nio was called the "Chinese Tesla (NASDAQ:TSLA) when it went public last September. On its opening day of trading it sold for as much as $12.69 per share. Since then, except for a brief period in March, it has been all downhill.But a surprising pick-up in deliveries gave the shares a 45% rally in one week recently. With 87.4 million shares traded July 9, Nio had the highest volume on any U.S. exchange.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSo, buy, buy, buy? No, no, no. Wait, wait, wait!At least, know what you're getting into. Nio Stock and the EV RevolutionThis much is true. There's an electric vehicle revolution going on. China is at the heart of it. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond But as government subsidies have been pulled, sales have declined. Thus, it was a big surprise when the China Passenger Car Association said sales in June rose 4.9% from a year earlier.Nio itself delivered 1,340 vehicles. Deliveries for the full quarter were 3,553. Tesla, by comparison, delivered 95,200 vehicles in the second quarter. Nio is not Tesla.Before this good news, all the commentary on Nio was bad. Some 4,803 cars were recalled after the batteries in three of them caught fire. Lithium ion batteries are subject to this risk, and a short-circuit can mean big trouble.The views of our David Moadel were typical. "Can the Nio Stock Wreckage Be Salvaged?" he asked on June 28. Nio, he concluded, is a speculative bet. It was a perfect set-up for anything perceived as being good news to send the stock rocketing upward.But at its July 11 opening price of $3.69 per share, Nio is still $2.50 per share away from what had been its trading range around $6 per share last Christmas. It's a $4.2 billion market cap on $4.9 billion of 2018 revenue, on which it lost $23.3 billion. (Ouch.) Seeking HopeThat doesn't mean a speculation on Nio isn't one some young investors might want to make.The company has begun deliveries of a new "crossover," the ES6. The ES6 has a swappable battery pack, so its range can be upgraded. There's also a "hypercar" called the ES9 on the horizon, which is setting speed records. Nio is once again talking about building its own factory, rather than relying on state-owned JAC Motors.Despite the subsidy pull-back, and despite the spectre of a Tesla factory going up in Shanghai, the fact is the Chinese government remains big on electric cars, and especially big on Chinese electric car companies. The MEB platform being pushed by Volkswagen (OTCMKTS:VLKAY) could create a China-based, global standard for mass-market electrics within 5 years.In that world, a luxury Chinese electric might sell well. The Bottom LineSadly, I agree with our Thomas Niel, who warned investors away from Nio on July 5. He sees the local market as saturated, the export market subject to the trade war.I think there are better ways to play the trend. Warren Buffett has invested in BYD Company (OTCMKTS:BYDDF) He took a 9.9% stake for $282 million 10 years ago, when BYD was just a battery maker. BYD is growing faster than the Chinese electric car market, with sales of 73,172 vehicles in the last quarter.If you're going to bet on electric cars, bet on the mass market, not the class market.Dana Blankenhorn is a financial and technology journalist. He is the author of the mystery thriller, The Reluctant Detective Finds Her Family, available at the Amazon Kindle store. Write him at email@example.com or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this article. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy for Less Than Book * 7 Marijuana Stocks With Critical Levels to Watch * The 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond The post Nio Stock Is Still Too Speculative for Most Investors appeared first on InvestorPlace.
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.
I don't always understand trends, but I do recognize them. And for whatever reason, Plug Power (NASDAQ:PLUG) attracts a lot of eyeballs. Now, part of it is due to the company's strong performance in the markets. At time of writing, the PLUG stock price is trading hands at $2.30, representing an over 85% year-to-date haul. That is serious power!Source: Shutterstock Another element likely driving positive sentiment is the company's longer-term potential. Back in the craziness of the 2000 tech bubble, Plug Power stock reached well into four-digit territory. When you compare where shares once were to where they are now, you can't help but wonder: a return to those heights is the stuff of cryptocurrency dreams.Finally, you have the technological fundamentals underlining PLUG stock. As most of you likely know, Plug Power specializes in hydrogen fuel cell systems. Scientifically, it's an exciting arena, potentially offering another pathway to total energy independence. That right there appeals to a broad segment of the population, from traditionalists to trendy millennials.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Retail Stocks to Buy for the Second Half of 2019 Moreover, these same fundamentals attracted buyers several years ago to companies like Tesla (NASDAQ:TSLA). Today, speculators are piling into similar electric vehicle and alternative-energy companies like NIO (NYSE:NIO). The allure of untold upside gains justified by next-generation technologies keeps investors salivating.But are these factors good enough to consistently bring home shareholder returns in Plug Power stock? I have my doubts, which focus on one concept: you've got to understand the science of alternative energy.When you do, you'll see that whatever drives the PLUG stock price is mostly human psychology in action. If it traded on the actual science, PLUG would soon be unplugged. PLUG Stock Has the Narrative but Not the SubstanceYou don't have to be a scientist to understand that limitations govern life. For instance, if you're running late to the office, you could literally do that: run. But if you do, you'll expend energy. And the longer you run, the rate at which you burn energy will accelerate.In economic and financial terms, we call this the law of diminishing returns. Further, there's an adage that states you can't have your cake and eat it too. And these principles stymie the longer-term narrative of the PLUG stock price.Let's consider the broader marketing message behind PLUG. With their alternative-energy sources, society can achieve multiple goals at once. These include cleaner emissions and eventually no dependency on volatile Middle Eastern politics. Theoretically, alternative energies keep consumer costs low, protecting us from price gouging at the pump.Naturally, the message resonated with risk-takers, boosting the market value of Plug Power stock. Yet the science is not clear about the benefits of hydrogen fuel cells. According to a litany of counterarguments against hydrogen energy by CleanTechnica.com contributor Zachary Shahan, based on a post on this blog, this energy subsegment could be pure hype.While some of the points have been disputed, Shahan reiterates some of the post's detailed criticisms, such as that fuel cells wear out more quickly than lithium-ion batteries, and are difficult to regenerate. Furthermore, he makes the claim that hydrogen as a fuel is very difficult to make. I pulled up an article from Energy.gov which confirms Shahan's concerns. Hydrogen also has significant infrastructure problems.While I won't dissuade anyone from taking potshots at Plug Power stock, you've got to look at the real fundamentals. I don't think they speak kindly about the long haul.Instinctively, you know what Shahan and other critics say is true. If you enhance one attribute, you necessarily sacrifice others. PLUG looks like that tardy worker who claims he can run for hours without breaking a sweat. Plug Power Stock Masquerades as a Legitimate InvestmentHere's the thing that confounds the picture regarding PLUG stock: the underlying technologies actually work. Many high-profile names, including Amazon (NASDAQ:AMZN), Walmart (NYSE:WMT), and General Electric (NYSE:GE), have signed on with various deals and partnerships.But that doesn't mean the technology is economically viable. Tesla CEO Elon Musk called hydrogen-based cars "mind-bogglingly stupid." You'll recall that Musk himself doesn't always make smart decisions. Hydrogen-based cars are currently very expensive, and so are the fueling stations. But that doesn't mean the technology has topped out. And of course, hydrogen-based cars would be a real threat to Tesla if they became affordable to the average driver.However, I'm going to go a step further: pure EVs aren't the answer, either. For drivers to have clean emissions and attractive, sporty rides, they must sacrifice something. Often, this means a higher ticket price, or inconveniences such as long charging times. While some folks can afford these costs, most probably can't.To summarize, PLUG stock represents a viable technology in that it works. However, Plug Power is not a viable business because hydrogen currently doesn't work efficiently. * 10 Best Dividend Stocks to Buy for the Rest of 2019 and Beyond Until we change that -- and it will be a while before it happens -- I wouldn't risk excessive funds on Plug Power stock.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Buy on College Students' Radars * 7 Retail Stocks to Buy for the Second Half of 2019 * The S&P 500's 5 Best Highest-Yielding Dividend Stocks The post The Tech Behind PLUG Stock Still Needs to Catch Up to the Promises appeared first on InvestorPlace.
Tesla (NASDAQ:TSLA) looks poised to ramp up again soon. The Palo Alto, California-based electric vehicle (EV) firm recently reported a record quarter in terms of cars built. Now, it looks poised to resume hiring and take production to record levels. This has sent TSLA stock more than 23% since early June, compared to a 8.9% gain in the Nasdaq Composite index.Source: Shutterstock Although risks remain, the company has positioned itself not only to return to profitability but also to bring itself further into the mainstream as it takes Tesla stock back to all-time highs and beyond. More Workers Making More CarsTSLA moved higher in Wednesday trading following a release by Bloomberg of an internal email that told employees that the EV maker is "making preparations" to increase production at its Fremont, California assembly plant following a quarter of record deliveries.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Best Stocks for 2019: A Volatile First Half Despite job cuts in recent months, Tesla has begun to increase hiring both in Fremont and at its Nevada battery factory. This comes on the heels of a report that the company produced 95,200 vehicles in the second quarter. Of those, 77,550 of the deliveries were Tesla's lower-cost Model 3. Between these improvements and the construction of its factory in Shanghai, Tesla is poised to grow beyond the estimated 400,000 deliveries it expects to make this year. Still, this meant sales of the pricier Model S and Model X have declined. That slippage is creating profitability concerns among some investors. Estimates Again Moving HigherHowever, for the first time in months, the profit outlook has improved. After months of declining estimates, consensus losses for 2019 rose to $1.68 per share, up from a loss of $1.79 per share estimated last week. For 2020, profit estimates now stand at $5.05 per share, up six cents per share from last week's consensus estimate.This 2020 profit estimate gives TSLA a forward price-to-earnings (PE) ratio of around 46.5. Analysts also project that profit growth will average 114.3% per year over the next five years. If these numbers can hold, I think Tesla stock can move much higher.Moreover, the company expects to open its Gigafactory 3 in China late this year. They plan to produce about 150,000 next year in the factory's first phase. As InvestorPlace contributor Faisal Humayun wrote recently, this new factory will produce the Model 3 at a 50% lower cost. That would also make Tesla much bigger in China than homegrown electric cars such as Nio (NYSE:NIO). Don't Ignore Tesla Stock RisksStill, investors should remain mindful of risks. The current economic expansion has entered its 11th year, with recession talk getting louder every day. Also, Tesla's $42 billion-plus market cap takes it ahead of Ford (NYSE:F) and Fiat Chrysler (NYSE:FCAU) and fueling valuation concerns. Moreover, the trade war between the U.S. and China lingers on; Gigafactory 3 will mitigate the direct effects on TSLA. However, the economic slowdowns that come with trade wars could affect sales.Then there's Tesla's unique risk factor: The eccentric behavior of CEO Elon Musk. As recently as a few months ago, profitability had slipped away, and Mr. Musk cut the size of his workforce. Reversing course so quickly may have inspired investors. However, the continued course corrections don't breed feelings of stability. * 7 Retail Stocks to Buy for the Second Half of 2019 Still, with production levels set to reach 500,000, Tesla has shown that it will probably not become the next DeLorean Motor Company or Fisker Automotive. With its massive growth and viable path to profitability, TSLA looks poised to set new highs sooner rather than later. Bottom Line on TSLA StockAlthough risks remain, TSLA stock looks poised to continue its recovery. As recently as a few months ago, Tesla appeared troubled as its prospects to earn a profit melted away, and the company began to let workers go.However, record auto production and a signal that Tesla will ramp up both production and hiring have brought new optimism. Moreover, the new factory in Shanghai will likely help Tesla side-step the trade war and bring a record number of cars to market. Yes, either the economy or the mood of Mr. Musk could derail this move higher. However, if the company can live up to analyst expectations, TSLA stock has nowhere to go but up.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 Mull Tesla Stock Buy as Production, Hiring and Sales Rev Up appeared first on InvestorPlace.
This most-searched list is a feature included in Benzinga Pro's Newsfeed tool. It highlights stocks frequently searched by Benzinga Pro users on the platform. Vislink Technologies, Inc. (NASDAQ: VISL ) ...
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.
Shares of Nio Inc. surged in very active trading Wednesday, putting them on track to match their record win streak, after the China-based electric car maker reported second-quarter deliveries that were well above expectations.
Shares of Nio Inc. shot up 6.8% on heavy volume in premarket trading Wednesday, which puts them on track to match its longest win streak since going public 10 months ago, after the China-based electric car maker reported second-quarter deliveries that beat expectations. Trading volume topped 1.5 million shares, enough to make the stock the most actively traded ahead of the open. The company reported earlier second-quarter deliveries of 3,553 vehicles, above its previous guidance range of 2,800 to 3,200. Nio's shares have gained 44.7% over the previous six sessions, the best 6-day performance since it started trading on Sept. 12, 2018. A positive close Wednesday would mark the 7th-straight gain, which would match the record win streak over the 7-day stretch ending Feb. 1, in which the stock rose 20.6%. The stock has dropped 42.1% year to date through Tuesday, while the iShares MSCI China ETF has climbed 11.7% and the S&P 500 has gained 18.9%.
Nio Inc – ADR (NYSE: NIO ) shares continued to see buying interest on Wednesday morning. What Happened The Chinese electric car company said it delivered 1,340 vehicles in June , a 23% increase from the ...
NIO Inc. (“NIO” or the “Company”) (NIO), a pioneer in China’s premium electric vehicle market, today provided delivery results for the second quarter of 2019. Founded in November 2014, NIO’s mission is to shape a joyful lifestyle by offering premium smart electric vehicles and being the best user enterprise.
ADR (NYSE: NIO) shares have been broadly on an uptrend since they hit a 52-week low of $2.35 in mid-June. The electric carmaker, often referred to as China's Tesla Inc (NASDAQ: TSLA), had a disappointing first half this year thanks to a decline in first-quarter sales, a reduction in electric vehicle subsidies announced in late March and general macroeconomic weakness in China exacerbated by tthe Sino-American trade standoff. Although Nio shares have been staging a steady recovery since the mid-June lows, the momentum has accelerated since the start of July.
It's been a rough year for Chinese luxury-electric-vehicle maker NIO (NYSE:NIO). In 2019, Nio stock price has dropped about 40% - versus an 18% gain for the S&P 500 - amid a deceleration of auto sales in China, a sharp reduction of China's EV subsidies, and the sluggish growth of NIO's EV sales.Source: Shutterstock But Nio stock has shown surprising signs of life over the past month. From an early June low of roughly $2.40, NIO stock price has rallied around 47% over the past near month to levels just shy of $3.90. * 7 A-Rated Stocks to Buy for the Rest of 2019 Why the huge reversal of Nio stock price? A few simultaneous, positive developments have sparked a powerful rally by a depressed stock.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe biggest question is: will this dynamic persist? That"s tough to say. There are a few tailwinds for Nio stock on the horizon. There are also a few headwinds on the horizon. Meanwhile, looking at the big picture, the long-term fundamentals of Nio stock are good, but not great. For Nio stock price to rise tremendously a few tough-to-believe assumptions will have to be proven correct.So investors shouldn't be fooled by the recent rally of Nio stock price. It could be the start of something much bigger, but that's probably not the case. Investors would be wise to wait for more clarity before buying Nio on its strength. The Rebound Will Face HeadwindsThe big rebound of Nio stock over the past month has been powered by a few things.First, NIO's U.S. counterpart, Tesla (NASDAQ:TSLA), reported much better-than-expected second-quarter delivery numbers, which broadly reaffirmed that the global EV growth trend remains alive and well despite sluggish early 2019 demand due to lower EV subsidies in the U.S. and China. Second, the U.S. and China agreed to a trade-war truce at the G-20 Summit. Third, the rally of the U.S. dollar has stalled over the past month. Fourth, in June China's auto sales grew year-over-year for the first time in 12 months.The problem is that most of these tailwinds won't last. The Tesla bump is in the rear-view mirror. The market is already largely pricing in a trade deal. The U.S. dollar could cool off going forward, but that's a relatively weak positive. China auto sales bounced back in June, but that was powered by heavy discounting which isn't expected to continue.Thus, the tailwinds which have powered the strong rebound by Nio stock price over the past month will fade over the next few weeks. As the catalysts fade, this rebound will run into headwinds.Specifically, China is slashing its EV subsidies at the same time that China's auto market is contracting and China's economic expansion is slowing. Ultimately, that is likely to create an unfavorable EV sales backdrop for NIO. It also suggests that Nio's 2019 numbers won't be great.By failing to post great 2019 numbers, NIO could short-circuit this rally of NIO stock. As a result, this rebound does not look sustainable. Betting on Nio Stock Over the Long-Term Is Highly SpeculativeNio stock does have a potential route to huge gains. But that route is unclear and uncertain.NIO is exposed to two mega-trends: Chinese urbanization and the EV revolution. Those two mega-trends will unfold favorably over the next several years. As China's middle class continues to expand and urbanize, China's auto market will continue to grow.Meanwhile, as the government continues to promote EV adoption, China's EV market will expand its share of the growing China auto market. Consequently, China's EV market will grow by leaps and bounds over the next several years.NIO is a small player in that market, as it captured less than a 1% share of China's EV market last year. As a smaller player, the company stands to be one of the bigger losers as the China government phases out EV subsidies. Further, NIO sells luxury vehicles, so its addressable market is inherently small. More competition is also arriving, and that's a negative for NIO's long-term growth trajectory.Given these trends, NIO's market share probably won't increase by much over the next several years. At best, NIO's market share will reach 5% in a decade. More realistically, it won't exceed 2%. Assuming 25% of vehicles sold in China are electric by then, NIO's vehicles retail for roughly $50,000, its gross margins hover around 20%, and its operating-spending rate is about 10%, then NIO's profits will likely hover anywhere between $500 million and $1 billion in a decade.Based on a forward price-earnings ratio of 16, which is average for the market, and a 10% discount rate, that means that the valuation of Nio stock today should be somewhere between $3 billion and $6 billion, depending on its market share in a decade. At this point in time, the lower end of the spectrum feels more likely, given the current subsidy reductions and forthcoming competition. The Bottom Line on Nio StockThe recent strength of Nio stock could be the start of something much bigger. But, at this point in time, the long-term bull thesis on NIO simply lacks credibility and evidence. Until it gains credibility (likely through a 2019 sales-volume ramp that is above and beyond expectations), NIO is best avoided, given its highly risky and speculative nature.As of this writing, Luke Lango was long TSLA. 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 Why Nio Stock Is Quite Risky appeared first on InvestorPlace.
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.
It is always tempting to consider exposure to a stock that has been beaten down significantly in anticipation of a bounce back rally. Nio (NYSE:NIO) was trading at $10.16 on March 5. Four months down the line, the stock has slumped by 75% to current levels of $3.49.Source: Shutterstock I believe that Nio remains unattractive even after the big decline, basing my thesis on three key factors. Significant Sales DeclineFor the month of May 2018, China posted the worst ever sales decline, slumping by 16.4%. This was the 11th-consecutive monthly decline and underscores the point that an economic slowdown coupled with the U.S.-China trade war has dented consumer sentiment and purchasing power meaningfully.InvestorPlace - Stock Market News, Stock Advice & Trading TipsA more-worrying factor for Nio stock investors is that new electric vehicle segment sales grew by just 1.8% in May 2019 after an 18.1% jump the previous month. Therefore, the decline in sales has been broad based and as economic growth remains sluggish, it is unlikely that sales will gain traction in the foreseeable future.The decline in auto sales was evident in the Q1 results. ES8 sales for 1Q19 were 3,989 units as compared to 7,980 units in Q4 2018. Further, April 2019 sales were 1,124 units and the decline in units sold was more than anticipated by Nio watchers. * 10 Stocks That Should Be Every Young Investor's First Choice Overall, economic concerns coupled with the trade war have hurt the sector and it's likely that sluggish sales will sustain in the coming quarters. In other words, there is unlikely to be any positive stock trigger from the perspective of sales growth. Cash Burn And Equity DilutionAnother major concern for investors is the level of cash burn and its potential impact on the Nio stock price.Just to put things into perspective, Nio reported negative cash flow from operations for 2017 and 2018. The company also reported negative margin at operating level for Q1 2019 and with weak sales growth, I believe that operating cash flows will remain negative through 2019.While Nio still has a cash buffer of $1.12 billion as of Q1 end, I believe that cash position will decline or net debt will increase in the coming quarters. It is also likely that the EV maker pursues equity dilution and that can negatively impact the stock price.From a liquidity perspective, Nio has announced a framework agreement with state-owned fund Beijing E-Town International Investment and Development Company. While further details are awaited, E-Town Capital will invest up to RMB 10 billion ($1.45 billion) in exchange for minority stake.Clearly, I am not suggesting a funding crisis. The only point from a shares perspective is that equity dilution will translate into NIO stock trending lower. Negative Impact Of Lower Subsidy And CompetitionA third factor that is likely to have an impact on the company's margin in the coming quarters and years is the gradual phasing out of subsidy for the electric car industry.The Chinese government plans to gradually reduce subsidy with a target to completely phase out subsidies by 2020. Amid the economic slowdown, the phasing out of subsidies will have a negative impact on sales as electric car manufacturers will have to hike prices or face further cash burn. * 7 Retail Stocks to Buy That Are Down in 2019 It is also worth noting that Nio faces significant competition within the EV industry in China. Just as an example, Tesla (NASDAQ:TSLA) is setting-up a Giga-factory to cater to the demand in China. Similarly, BYD Auto Industries is a much bigger company in this segment with higher financial flexibility and investment in innovation. BIAC Motors also has significantly higher -- compared to Nio -- sales of electric cars through BAIC BluePark New Energy Technology.So here we are: Just a few years in the EV business and Nio is challenged by an economic slowdown and increased competition. Bottom Line on Nio StockEven if U.S.-China trade tensions de-escalate, Nio has to cope with other headwinds that include China's sluggish economic growth, rapid cash burn, gradual phasing out of government subsidy and strong completion within the industry with several established players that can invest more on innovation.Nio stock remains one to avoid with the immediate concern being potential equity dilution and sustained weakness in sales with depressed margins.As of this writing, Faisal Humayun did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 A-Rated Stocks to Buy for the Rest of 2019 * 7 Education Stocks to Buy for the Future of Academia * 5 Stocks to Buy as You Rebalance Your Portfolio The post 3 Reasons To Avoid Nio Stock Even After Sharp Second-Quarter Correction appeared first on InvestorPlace.
Shares of Nio Inc. surged 5.1% toward a six-week high in afternoon trading Monday, putting them on track for a fifth straight gain. The gains in the China-based electric car maker's stock got a boost in the wake of better-than-expected deliveries data from Tesla Inc. , out early last week. Shares of Nio, referred to by some as the Tesla of China, have now rocketed 34.5% during its win streak, while Tesla's stock has gained 3.7% and the S&P 500 has edged up 0.1% over the same time. That would market the best 5-day performance by Nio's stock since it ran up 34.9% during the five-session stretch ended Feb. 26, 2019.