3.1999 +0.02 (0.63%)
After hours: 7:42PM EDT
|Bid||3.1500 x 29200|
|Ask||3.1700 x 38500|
|Day's Range||3.0000 - 3.1800|
|52 Week Range||2.3500 - 10.6400|
|Beta (3Y Monthly)||N/A|
|PE Ratio (TTM)||N/A|
|Earnings Date||Sep 24, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||5.21|
Nio (NYSE:NIO) stock has seen a nice rebound since the start of September. The Nio stock price has bounced from a low of $2.58 on September 3 to $3.12 at the close September 16. With new financing in place, Nio could hang on as it pursues the path to profitability.Source: xiaorui / Shutterstock.com But is a turnaround realistic?Tesla (NASDAQ:TSLA) will soon open its Shanghai facility. The Chinese EV market is an opportunity, but Nio does not appear to have a clear-cut edge.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Tech Stocks You Should Avoid Now Will the company survive and thrive? The future has yet to be written. But given the valuation of Nio stock, investors should continue to practice caution. Recent Developments With Nio StockWhether you are a Nio stock bull or bear, you can't deny one thing: The company needs cash. Earlier this month, the company raised $200 million via a convertible debt offering. The buyers were Chinese conglomerate Tencent Holdings (OTCMKTS:TCEHY) and Nio's own CEO, William Li. The convertible notes come in two tranches. The first tranche matures within a year, and is convertible at $2.98 per share. The second tranche matures in three, and is convertible at $3.12/share. This successful financing helped to push up the Nio stock price. As I have discussed previously, financing is of big importance to Nio. The company not only loses money on an operating basis, but posts negative gross margins as well. The company is no stranger to convertible debt, raising $650 million last January using convertible notes. But while convertible debt is a cheap, it is dilutive. If NIO does manage to turn itself around, much of the upside will be soaked up by bondholders exercising their conversion rights.The other major morsel of news was the China-U.S. trade talks. The two countries plan to resume high-level trade talks in October. The trade war affects the company, but not in a direct way since its core market is domestic. China's economy continues to cool. The last thing it needs is a trade war that exacerbates these growth concerns. With a slowing economy, EV makers will have a tough time selling their vehicles. With the Chinese government cutting EV subsidies, demand will continue to slack for the company's E6 and E8 vehicles.This means NIO stock's bounce back may be a short lived. While the Nio stock price has fallen ~70% from all-time highs, shares remain overvalued. Competition Makes NIO's Valuation Mind-BogglingNio stock is overvalued. There's no two ways about it. With the company unprofitable, the only usable metric is the enterprise value/sales (EV/Sales) ratio. The stock currently trades at an EV/Sales ratio of 4.2. Compare this to Tesla, which trades at an EV/Sales of 2.2.Why pay a premium when you get get Chinese electric vehicle (EV) exposure with TSLA? Yes, Nio stock is more likely to see parabolic growth due to its size. Tesla is too big to see a 500% or 1000% return if all catalysts play out. But at least Tesla has positive gross margins. Nio continues to sell cars for less than their production cost. Its hard to see how that will play out favorably.Protectionist policies may favor NIO over foreign-owned EV brands like Tesla. But what's to say they have any particular edge over other Chinese companies? There are scores of other automakers making electric vehicles in China. Take a look at this chart of Chinese EV sales in May. The top dogs are BAIC, BYD (OTCMKTS:BYDDF), SAIC, JAC, and Chery. With the exception of BYD, all of these are state-owned enterprises. The state-owned Chinese automakers have the scale and resources to one day build EVs profitably. I could see Nio eventually getting absorbed by one of the state-owned Chinese automakers. Nio already builds its vehicles in a JAC-owned facility.High investor exceptions prop up the Nio stock price. But if more bad news comes out of the company, these speculators could make a run for the exits. Nio Stock Remains a Hard PassThere is too much risk and not enough opportunity with Nio stock. The company's losses require additional capital infusions. Until the next earnings release (on September 24), investors remain in the dark about the company's cash position. But despite these risks, shares remain overvalued. The Nio stock price continues to imply the automaker will be a major player. But there is little to suggest they have an edge against state-owned automakers, or foreign brands such as Tesla.The stock remains a hard pass. While it is possible shares could rally on better-than-expected performance, shares could easily nosedive if results are worse than projected. There is nothing wrong with paying a premium for a company going places. But NIO is not exactly setting the world on fire. * 7 Momentum Stocks to Buy On the Dip Consider opportunities elsewhere, and avoid Nio stock.As of this writing, Thomas Niel did not hold a position in any of the aforementioned securitiesThe post Despite New Developments, Nio Stock Makes TSLA Look Stable appeared first on InvestorPlace.
The markets are hanging out in the red today, spurned on by fears about a spike in oil prices. Drone strikes against oil facilities in Saudi Arabia sent the oil market scrambling -- both Brent and WTI crude prices are up well over 10% today.Source: Shutterstock The timeline for getting the damage repaired is likely to be counted in weeks, not days. And in the meantime, oil stocks are on everyone's mind. The United States Oil Fund (NYSEARCA:USO) pushed to gains of over 13% on the day. It would be better news if it didn't come with headlines of international unrest.But as many readers focused their attention on the oil stocks, here are a few of the other articles InvestorPlace readers found particularly interesting today:InvestorPlace - Stock Market News, Stock Advice & Trading Tips Aphria Stock Needs Better FriendsThere's a tendency in the markets for some stocks to occasionally fall in sympathy with one of their close peers. And James Brumley thinks that's exactly what's happening with Aphria (NYSE:APHA) stock.Aphria flexed on earnings, and notable to many investors was the fact that APHA actually turned a profit. That's something plenty of its marijuana stock brethren are still working toward. You'd think that would launch APHA stock to the head of the pack, but its rally mostly faded with the rest. * 10 Recession-Resistant Services Stocks to Buy Brumley does point out that the amount of Goodwill on the books may be a problem, but overall says, "Right or wrong, Aphria stock is guilty by association. When most other names in the business are losing ground due to valuation concerns, the selling can be rather indiscriminate." Understanding How Hexo Stock Values Its InventoryAs we wait for Hexo (NYSE:HEXO) to report earnings, Mark Putrino wants to make sure you understand one of the most interesting and potentially misunderstood parts of a marijuana stock's valuation -- how it values its inventory.As Putrino explains, "Four variables are considered to determine the valuation. These are the average selling price, the yield per plant, the stage of growth and the amount of wastage."The average selling price and stage of growth are pretty straightforward, but wastage and yield are estimated, and if you want to invest in Hexo stock, it's important to understand how they make those estimates.(For what it's worth, he also mentions that Hexo is "very forthcoming" with the calculation and the numbers it uses.) Vital Levels to Watch for Nio StockA couple of InvestorPlace writers took a look at Nio (NYSE:NIO) today, both considering it for a short-term trade.Nio stock is on a bit of a roll lately, and Bret Kenwell says that with a potential bottom in for the Chinese auto market, Nio could be ready for more gains. As he put it, "The technicals are starting to behave better for Nio stock; now it needs the fundamentals to improve as well."Nicolas Chahine, meanwhile, thinks if the stock can push past resistance, there are more gains to be found. "The NIO stock price is now headed into resistance because of a price cluster near $3.50 per share," he wrote. "If I'm not yet long the stock, I would wait until the bulls are able to push prices above that before chasing it. "It's also important to remember that Nio has earnings coming up on Sept. 24.That's it for today's commentary. Please feel free to drop us a note at firstname.lastname@example.org to let us know what we got right and what we got wrong. Happy investing! More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post InvestorPlace Roundup: Aphria Stock Needs Better Friends appeared first on InvestorPlace.
Management will soon have the opportunity to give Nio (NYSE:NIO) stock the push it needs to trigger a continuation rally so it can dig itself out of this hole, but it won't be easy.Source: xiaorui / Shutterstock.com Thanks to companies like Tesla (NASDAQ:TSLA) and NIO, e-cars are gaining momentum on the internal combustion engine. For decades the idea was silly, and for some reason manufacturers made their electric cars look odd. * 7 Tech Stocks You Should Avoid Now Now the cars are gorgeous. As a result, the electric car market is growing rapidly and gaining serious momentum. Even the major global auto manufacturers are joining the e-car movement. Most notably Porsche with its Taycan debut.InvestorPlace - Stock Market News, Stock Advice & Trading TipsNIO operates in China, which is a huge market for electric vehicles. While it is growing its business, however, its stock has gone the wrong way. Sporadically, NIO stock rallied fiercely especially after a TV special that propelled the stock to almost $11 per share, only to fail miserably mere hours later. Now, six months later, the NIO stock price is 70% lower and mired just above its all-time lows.From here, it is best to only trade Nio stock. Otherwise, one has to own it for the really long-term hopium of a comeback. For that there are two necessary assumptions. The first is that electric cars in general will succeed in becoming mainstream. This will probably require the help of legislation on the global level and there are signs that this is possible. The second assumption is that NIO stock will succeed in its own mission inside the overall market success.For shorter-term, there are clues for trading the stock from the charts. In my last write-up, I noted that the NIO stock was broken but the company still had a chance. While this is true, it is little consolation for those stuck in the stock from higher levels. But if someone hung on this long there is more upside potential than downside risk, so it's probably too late to exit now.There is an earnings report coming soon which adds another temporary layer of risk as recent reactions to those have been negative on Wall Street. NIO Stock Headed Into Wild Action SoonSour investment sentiment alone is not an indication of doomsday forecast for the company. Case in point: TSLA stock is also miles away from its highs and so far the company is still executing on its expansion plans. So NIO stock woes are not necessarily a sign of a dying company. But it is important that management delivers some good operational news so that investors don't capitulate out of the stock in a week when they report earnings.Meanwhile, September has been good for NIO stock as it bounced hard off of the $2.60 per share low. This also marks the point of control for the period, meaning that this is where buyers and sellers fought the hardest, so it is supported until proven otherwise.Unfortunately the NIO stock price is now headed into resistance because of a price cluster near $3.50 per share. If I'm not yet long the stock, I would wait until the bulls are able to push prices above that before chasing it. This is also a place to book some profits for those long off the $2.50 base.Depending on what happens today with the news from Saudi Arabia and how it affects oil and electric car stock prices, there could be technical opportunity in NIO stock. If the bulls are able to establish the $3.20 as a base, they could extend this rally to retest $4 which was a recent failure point from early July. Otherwise, I expect another dip to establish a better base closer to $3 per share. Nio Stock Bottom LineThis is just part of normal price action in any stock and says nothing about NIO itself. So the best way to trade its stock here is to trade off these lines that matter on the lower time frames. The idea is to wait for the breeches as they happen and chase them in that direction.The alternative would be for investors to buy NIO on a leap of faith into the next earnings report hoping that the company gives Wall Street reasons to celebrate with a rally. Otherwise there's no guarantee that the recent lows will hold. Having a low $2.50 stock price doesn't mean it is cheap because it can go lower. Especially if management fails again in its quarterly goals. Click to EnlargeIt is important to not get emotional about an investment. For some reason, electric car stocks draw a lot of emotions on Wall Street. Using the charts helps separating feelings from strategy. There is great information in charts as price action always unfolds to historical patterns regardless of headlines. As they say, "price is truth," and in the end that's the only thing that matters here.Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post NIO Stock Headed Into Wild Action Soon appeared first on InvestorPlace.
Nio (NASDAQ:NIO) has quickly and quietly rocketed off its recent lows, climbing more than 25% in just a few trading sessions. It's got many investors wondering if Nio stock is set to run even higher over the ensuing days and weeks.Source: Carrie Fereday / Shutterstock.com One year ago, Nio stock went public on the New York Stock Exchange. With many dubbing it the "Tesla (NASDAQ:TSLA) of China," it should come as little surprise that it's been a volatile ride for the all-electric car maker.While the company debuted two electric vehicles more quickly than Tesla delivered its Model S and X, it hasn't generated the same fanfare that Tesla has. A big part of that, in my view, is thanks to Elon Musk.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Tesla versus NioDie-hard Tesla fans think of Musk as the saving grace to our earth. The one who will electrify the transportation market and slingshot the industry into the next century. All while fighting off short-sellers, FUD (fear, uncertainty, doubt)-writers and the evil auto and energy sectors. * 7 Discount Retail Stocks to Buy for a Recession Of course, his detractors have the exact opposite view: that he's a lying narcissist pulling the wool over investors' eyes whenever he so pleases.Then there's everyone else in between, who recognize Musk for what he is. An incredible entrepreneur who at times would benefit from putting his foot in his mouth and turning off his Twitter (NYSE:TWTR) account.Love him or hate him, embrace him or tolerate him, it's hard to argue the value Musk has brought to Tesla stock. While shares are down roughly 10% over the last five years, they're up more than 600% in six-and-a-half years. Also, TSLA is up approximately 1,000% in the last 10 years.Enough about Musk and more about Nio stock.All of this is to say that NIO doesn't have a Musk. Someone that can sell their product, that can create hype, generate headlines and get people taking notice. In a capital-intensive, low-margin business, that's exactly what a company like Nio needs. Someone who can get investors, customers and observers excited about their product.That's not to say NIO or others can't succeed without a Musk, but it makes life much easier. Trading Nio StockBoth the 20-day and 50-day moving averages are now trending higher for NIO stock. More importantly though, Nio is above downtrend resistance (blue line). Last month, this trend line squeezed Nio below $3, eventually sending it down to a low off $2.58 at the start of the month.However, that move was very important, at least as far as short-term developments go. When Nio stock bottomed at $2.58 and rallied, shares had notched yet another higher low. This is shown on the chart via purple arrows, as well as a purple uptrend line.While a series of higher lows is not necessarily a screaming buy signal, it is a bullish technical development. The only problem? The stock has been decimated over the past year. In 2019 alone, the Nio stock price is down 50%. From its highs, it's even worse, down a catastrophic 72.5%.So, what do bulls need to see now? They want to see Nio stock maintain above the 50-day and 20-day moving averages, and most importantly, not break the trend of higher lows. If shares can continue higher, $4 may be in the cards. Bottom Line on NIOThe technicals are starting to behave better for Nio stock; now it needs the fundamentals to improve as well.There are talks about a bottom in China's struggling auto market, while the company just raised $200 million in convertible debt via CEO William Li and Tencent (OTCMKTS:TCEHY). That's promising and should help fund Nio's capital-intensive business as it tries to turn free cash flow positive.Losses are still big for Nio and that's to be expected from an automaker. Again, just look at Tesla. Despite its global presence, the company still has trouble churning a positive bottom line.Speaking of its global presence though, Tesla is working to complete its Gigafactory 3 in China. While the country is the world's largest electric car market, increased Tesla competition could make it harder for Nio to win over customers.The bottom line: for those that are bullish on Nio stock, the chart is beginning to shape up. If the fundamentals improve, shares could go on a run. Below $2.50 causes concern. Remember, this is still a speculative holding.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Big IPO Stocks From 2019 to Watch * 7 Discount Retail Stocks to Buy for a Recession * 7 Stocks to Buy Benefiting From Millennial Money The post Big-Time Break Out for Nio Stock? appeared first on InvestorPlace.
Nio (NYSE:NIO) should be a better investment than it is, but Nio stock looks as if it's going to lose the EV race in a big way.Source: THINK A / Shutterstock.com The electric car revolution is coming and investors are readying their portfolios. Not only are the quieter and cheaper to run than their combustion-engine counter parts, but they're seen as better for the environment which has helped them catch on in heavily polluted places like China.However, while electric cars themselves are destined to gain momentum over the next decade, electric car stocks are another story. Some appear to be based solely on hope for the industry rather than solid fundamentals and that's the case when it comes to Nio.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBack in March NIO stock was flying high at $10 per share as investors likened the firm to Tesla (NASDAQ:TSLA). However, the enthusiasm quickly faded after the firm's lofty future plans started to look flimsy as its earnings pointed to a much rockier future. With Nio's stock price down to just $3 per share today, you might be wondering if there's a bargain to be had-- but I'd hold off as the stock isn't all its cracked up to be. The Trouble with Nio StockWhile there will undoubtedly be a huge market for electric vehicles in China over the next few years, it's important to note that investing in NIO doesn't necessarily mean you'll get a piece of that pie. * 7 Discount Retail Stocks to Buy for a Recession As Luke Lango pointed out, there are 486 EV companies currently operating in China. Although China has a massive population and there's certainly room for more than one player, that's a lot of competition. In America there are between 20 and 30 EV firms serving the market.That means that the next few years will likely bring on the demise of quite a few Chinese EV players. More companies will fail than will make it, so you have to pick your player wisely.With those terrible odds in mind, NIO stock may not be your top pick. For one thing, the firm has elected to go with a platform outside the mainstream to run its cars.Beijing has gotten behind a standardized platform called MEB which big names like Ford (NYSE:F) and Volkswagen (OTCMKTS:VLKAY) are also supportive of. NIO has elected to go its own way with a different platform, which could create regulatory issues down the road. Recovery Depends on DeliveriesIn any case, those factors which cast a bearish shadow over NIO stock were true back in March when investors were singing the automaker's praises and bumping its share price up to $10.What brought NIO back to earth was a poor earnings release that showed vehicle deliveries were lower than expected. Since then, deliveries haven't made a meaningful improvement- July deliveries came in at just 837. August deliveries will be the true reflection of whether or not the March earnings were the beginning of the end for NIO. The company was forced to recall a number of its vehicles due to battery issues, which management said was largely to blame for the poor delivery figures in June and July. In August, management is expecting to deliver somewhere between 2,000 and 2,500 vehicles. Hitting that target would send a positive message to Wall Street and put the buy-case for NIO back on the table. However, another month of dismal deliveries says NIO is heading for rock bottom. The Bottom Line on Nio stockThere's no urgency to buy NIO stock right now. The firm is due to release its August delivery figures at the end of September and I'd wait for that to even consider adding Nio to your portfolio.However, even if the August numbers hit management's guidance, NIO is risky. It's hard to pick out a clear winner in such a large and diverse field, but choosing the one that has gone against Beijing's standardized platform seems to be a risky strategy.If you're looking to buy "the Tesla of China," perhaps you should just buy Tesla-- the firm is building its own factory in Shanghai and its cars are not subject to the 10% purchase tax that its foreign peers are weighed down by. For now, NIO is a no-go for me at least until deliveries are firmly back on track.As of this writing, Laura Hoy did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Big IPO Stocks From 2019 to Watch * 7 Discount Retail Stocks to Buy for a Recession * 7 Stocks to Buy Benefiting From Millennial Money The post As Huge as the EV Market Will Be, Nio Stock Isn't Worth the Risk appeared first on InvestorPlace.
It's been a tumultuous year for Chinese electric carmaker Nio, which last September went public on the New York Stock Exchange. Now it's laying off dozens more in Silicon Valley.
Many people colloquially refer to Nio (NYSE:NIO) as the Tesla (NASDAQ:TSLA) of China. The term is meant to describe the company's attractive and futuristic electric vehicles. The problem is, like Tesla, Nio is running a race to long-term profitability that still seems elusive.Source: Shutterstock However, a greater concern for investors regarding Nio stock is viability, not profitability. The EV market in China is saturated and the company is lagging behind in sales. Compounding Nio's problem is that Tesla will soon produce cars in Shanghai. Tesla also has an exemption from the 10% purchase tax levied on most foreign car companies. Once that happens, it could be game over for Nio stock. Nio Has to Become a Leader in Its Home CountryThe bullish hope for Nio stock is the Chinese consumer. Although a McKinsey report confirms that China is the leading market for electric vehicles, it's reasonable to wonder just how big that market is. InvestorPlace contributor Josh Enomoto wondered the same thing when he pointed out that 35% of China's labor force works in the agricultural sector.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThis makes EVs not only impractical, but also very expensive. Nio's flagship model, the ES8, lists for around $68,000. While this is a discount to Tesla, it's still hard to see that price gaining traction to an agrarian population. * 10 Battered Tech Stocks to Buy Now I expressed a different concern when I wrote about Nio stock one month ago. I pointed out that Nio is not the leader in the Chinese market despite government subsidies and a favorable regulatory environment. Without a strong presence in other markets, it's hard to see a path to profits. Just How Big Is the Electric Vehicle Market?The electric vehicle market is real and growing. However, much like when alternative energy solutions first came on the scene, mainstream acceptance is an economic, not an environmental, issue.In fact a 2017 survey conducted by Driving Tests, a driving test simulator, found that a majority of U.S. consumers across all age groups were not interested in owning an electric car. While Chinese consumers may be more accepting of electric vehicles, manufacturers are facing a reality that consumers want convenience. That's particularly valid when they are paying $68,000 for a car as they are with the Nio ES8. It's Not Just About Building CarsFor electric vehicles to gain widespread acceptance will require an entire infrastructure. This ecosystem includes safe, reliable batteries and convenient charging stations that are available in scale.Nio recently self-reported a battery recall for its ES8 vehicles. In fairness, the battery issue is an ongoing problem for many EV companies. However, the will and the money to build a scalable network of charging stations is a classic chicken-egg question.With the price of gasoline still at comparatively low levels and the threat of a recession that could bring prices even lower, it's hard to see consumers trading up to an electric vehicle, even if they really believe in the technology. Is It the Start of a Recovery or a Dead Cat Bounce?Nio stock is making a small recovery in advance of the release of its earnings report on September 24. The Nio stock price has climbed above a line of support at around $2.80. And at $3.22, it's hanging around its 50-day moving average.However, this move is happening on light volume. This supports my conclusion that traders are seeking a quick profit while they wait for the earnings report.For the past year, whenever Nio stock has broken above its 50-day moving average, the relative strength index has moved into the overbought range and the stock has quickly declined. Right on cue, the Nio stock price declined on September 11, breaking a six-day winning streak. As of this writing, it was heading for another down day. What's next for Nio Stock?In its earnings report, investors will be looking to see if the company has reversed its declining delivery numbers. Although analysts are expecting Nio to increase its revenue by 126.9% this year and 90% in fiscal 2020, those forecasts may change if Nio cannot prove that it can deliver sales.Even if Nio can reverse its declining sales numbers, what does winning look like? For all of their bravado, I believe that Nio's future may be as a buyout target. The future is bright for electric vehicles. But Nio as it presently exists may not be around to see that future.As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Battered Tech Stocks to Buy Now * 7 Strong-Buy Stocks Hedge Funds Are Buying Now * The 7 Best Penny Stocks to Buy The post For Nio, the Future May Come Too Late appeared first on InvestorPlace.
The Palo Alto company has been operating converted Chrysler Pacifica hybrid minivans, dubbed G2, in senior villages in California and Florida for more than a year.
The last year has been rough riding for investors in Nio (NYSE:NIO). Nio is just one of 486 Electric Vehicle (EV) manufacturers in China fighting for a piece of the world's largest auto market. Since the NIO stock IPO a year ago -- almost exactly -- quickly hit an all-time intra-day high of $13.80, a volatile path has Nio stock has down at $3.25. Source: THINK A / Shutterstock.com The reason for this rollercoaster price action? Nio stock price has often been buoyed when it is touted in the media as the up and coming Tesla (NASDAQ:TSLA) of China. But then investor expectation comes back down to earth over the trade war, Nio's declining revenues and four straight quarters of losses -- with no near-term turn around in sight. * Take Buffett's Advice: 5 Vanguard Funds to Buy Investor sentiment is decidedly skittish on the Chinese EV market -- but Nio in particular. Competition is ruthless, and Nio's cash burn is turning into a forest fire. For the quarter ending December 31, Nio burned through nearly $370 million in cash. By any account, bankruptcy lawyers at major Shanghai law firms should be circling overhead ready to pounce on Nio. InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut when there is blood on the streets, value investors are also ready to pounce.Despite considerable downside risk, Nio stock still may represent an excellent strategic bet in the days leading to the next earnings announcement on September 24 for the second quarter of 2019.Here are three reasons why Nio stock should not be dumped just yet: 1) Tencent Holdings Putting Money on Nio's Roulette TableLast week, Tencent Holdings (OTCMKTS:TCEHY) and NIO's CEO William Li, announced a $200 million investment into Nio's convertible debt. This type of private placement, where Nio will pay a mere 2% interest, strongly suggests that Li was able to convince Tencent there's considerable upside in Nio stock. Convertible debt is often issued to companies with mediocre credit, but excellent long-term prospects. The debt can be converted into an option to buy equity at a price determined at issuance. Tencent is a giant Chinese conglomerate hedge fund with investments across the globe in e-commerce, gaming, internet-related services, media, entertainment, artificial intelligence, and technology. In this case, Nio equity is dirt cheap. Tencent and it's CEO Ma Huateng -- often called the Warren Buffett of China -- could stand to make a multiple of their initial $200 million convertible debt investment if Nio stock price takes off. If Nio goes under, by contrast, the $200 million will likely be wiped out. 2) Nio Is Not Just a Car -- It's a Lifestyle ConceptNio has long sought to position itself not merely as a manufacturer of metal vehicles with four wheels. Instead, much like Toyota Prius and Tesla, Nio wants to be seen as a lifestyle concept. Prius owners were not merely buying a car; they were making a statement about environmental sustainability. Similarly, Nio is positioning its product line as an uber-trendy fashion statement. This branding approach will help differentiate Nio from the massive competition in the Chinese EV market. Nio is spending heavily to establish its fashion credentials. For example, according to their corporate press release, NIO and Central Saint Martins University of the Arts, the London-based art and design college, teamed up to launch their "Blue Sky Thinking" global community of designers. The innovative design initiative brings together design talent and creates environmentally friendly designs for not just Nio EVs, but also fashion and accessories. While Nio EVs may not be parading down the catwalk at New York Fashion Week, Nio nonetheless wants to be seen as a fashion must-have. And Nio is spending to create that brand identity. 3) Nio Does Make a Quality ProductDespite the rough start for Nio stock and its shaky top-line revenues, Nio does make a quality product. Just last July, J.D. Power released its Inaugural China New Energy Vehicle Experience Index Study. In the J.D. Power study, the NIO ES8, their latest model, ranked highest among midsize/large EVs. For the NIO product range as a whole, Nio ranked highest of all brands for new energy vehicle and new-vehicle quality.Indeed, there is no guarantee that Nio will rebound anytime soon. The next quarterly earnings call could bring even more bad news for already hard-hit Nio stockholders. But one way or the other, particularly with deep-pocket financial backers like Tencent holdings, Nio should survive. * 10 Battered Tech Stocks to Buy Now With every downtick in price, Nio stock becomes an even better long-term value play. As of writing, Theodore Kim does not hold any position in the above mentioned stocks. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Battered Tech Stocks to Buy Now * 7 Strong-Buy Stocks Hedge Funds Are Buying Now * The 7 Best Penny Stocks to Buy The post 3 Reasons That NIO Stock Is Still a Buy at the Bottom appeared first on InvestorPlace.
Shares of Chinese premium electric vehicle (EV) maker NIO (NASDAQ:NIO) have been on a roller coaster ride ever since the company went public about a year ago. Over the course of the past year, the NIO stock price nearly doubled from a $6.26 IPO price to $12 within its first few days on Wall Street. That gain was clawed back to $6 over the next few months. Then, the ride took off again in early 2019, going to $14. Then, investors kicked shares lower over the past six months to where they are now, just above $3.Source: THINK A / Shutterstock.com Amid all this volatility, I've consistently sounded a cautious and bearish tone on NIO stock. My thesis has been pretty simple.There are a lot of EV brands in China. Not all of them will make it long term. In fact, very few of them will actually survive. Right now, probabilities and fundamentals suggest that NIO won't be one of the survivors. As such, while NIO stock could go boom long term, the more likely outcome is for the stock to go bust.InvestorPlace - Stock Market News, Stock Advice & Trading TipsI maintain that cautious thesis today.To be sure, there are signs that China's auto market and economy are re-accelerating. That's good news for NIO stock. But, until this company can impress investors with numbers that it will remain a relevant player in China's booming EV market for the foreseeable future, I don't think NIO stock will stage a meaningful move higher.As such, there's no rush to buy into NIO stock today. In this situation, patience is your friend. Monitor the China EV market and NIO's trends in that market from the sidelines. If signs appear that NIO is improving its competitive positioning, buy into NIO stock. Until then, stay away. The Good News For NIOThe good news for NIO stock is that China's economy and auto market appear to be bouncing back after a multi-quarter slowdown. * 7 Deeply Discounted Energy Stocks to Buy On the broad economic front, most data coming out of China implies that the worst of the country's multi-quarter economic slowdown -- which started in early 2018 -- is now in the rear-view mirror. Retail sales trends, in a downtrend since early 2018, have gradually improved over the last few months. PMI readings, similarly in a downtrend since early 2018, have stabilized over the last few months. Industrial profit growth rates have shown consistent improvement throughout 2019. The OECD's composite leading indicator for China has actually improved for five straight months. Many of China's biggest companies -- like Alibaba (NYSE:BABA) and JD.Com (NASDAQ:JD) -- have actually reported better-than-expected numbers over the past few months.Meanwhile, on the auto front, we are seeing similar signs of a turnaround. Specifically, China's auto market has declined for 13 straight months, with many of those months posting sizable declines. But, in July, the market dropped only 4.3%, one of the smaller declines in recent memory. There has also been a push from the government to further support EV adoption in urban areas through the removal of certain auto purchase restrictions which have constricted demand.Overall, then, the economic data coming out of China broadly implies that this country's economy is finally starting to turn the corner, and that China's auto market is following suit. That's all great news for NIO stock. The Bad News For NIOThe bad news for NIO stock is that re-accelerated economic and auto market expansion in China might not create a tide which lifts all boats.The big, overarching problem with NIO is that it is one of 486 EV companies in China. You read that right. There are 486 EV companies in China. That's far too many. In America, there are no more than 20 to 30 electric vehicle companies. In the long run, as China's EV market matures, rationalizes, and consolidates, it will down-size to something very similar to the U.S. EV landscape -- or, about 25 EV companies.In other words, 95% of China's EV companies today, probably won't be around by 2030. Those aren't good odds for NIO.Current trends are similarly unfavorable. NIO's delivery volume peaked in the fourth quarter of 2018 at nearly 8,000 deliveries. Ever since, delivery volume has dropped … significantly. In the first quarter of 2019, NIO delivered less than 4,000 cars. In the second quarter, it delivered around 3,500 cars. This quarter, the company is on track to deliver about 2,500 vehicles. * 7 Stocks to Buy In a Flat Market In other words, from late 2018 to today, NIO's quarterly deliver volume rate has shrunk nearly 70% and that's with NIO launching a new vehicle in mid-2019.Those are ugly trends. Broadly, they imply that NIO may not have what it takes to last long term in China's auto market. So long as the trends support that thesis, NIO stock will remain depressed. Bottom Line on NIO StockLong term, NIO stock could go boom if the company does turn into the go-to premium EV brand in China's booming electrics market. But the data right now simply does not support this thesis. Instead, it supports the thesis that NIO will be among the 95% of China EV companies that ultimately goes bust instead of boom.As such, the best move right now with NIO stock is to wait-and-see. Wait for more numbers to come out of NIO and China. See if NIO's trends are improving, or not. If they are improving, buy into the rebound bid. If they aren't, continue to stay away until they do.As of this writing, Luke Lango was long BABA and JD. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post Why There's No Rush To Buy Into NIO Stock appeared first on InvestorPlace.
Perhaps no stock on the NASDAQ is as disparaged these days as Nio (NASDAQ:NIO). The Chinese maker of luxury electric vehicles is currently seeking a $200 million cash infusion from Tencent Holdings (OTCMKTS:TCEHY) and CEO William Li. Meanwhile, it's due to report August deliveries on September 24.Source: THINK A / Shutterstock.com If the delivery numbers are as bad as July's 837, it could spell the end for the hugely hyped company. This is especially true given a recall of 4,803 ES8 vehicles over battery issues.Shares of NIO stock that were trading at over $10 as recently as March closed yesterday at $3.14. The company's market cap has been whittled down to $3.17 billion, against $6.6 billion of debt as of March. That's the most recent financial report on record, and was delivered in late May, unaudited.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Wrong ApproachI called Nio too speculative in July, after the stock rose on an unexpected pick-up in deliveries.The problem here isn't the EV market but Nio's approach to it. Despite disappearing subsidies, electric cars will be a mass market in China. Beijing is committed to a standard platform dubbed MEB that has already won support from Volkswagen (OTCMKTS:VLKAY) and Ford Motor (NYSE:F) in the U.S.The problem is that Nio is not using MEB. Instead it is trying to define a high-performance category of electrics and compete directly against Tesla (NASDAQ:TSLA), which is building a factory in Shanghai. * 7 Deeply Discounted Energy Stocks to Buy Nio lent its high-end EP9 for review by The Grand Tour, an Amazon (NASDAQ:AMZN) Prime show, and the hosts were impressed. But that vehicle isn't street legal. The car has set new track speed records and it might still impress as a race car. But Nio sold out its racing team in April. Electrics are ComingElectric cars are coming. They're simpler than internal combustion engines. They need less service. They're quiet. They cost less to run. Tesla has proven the market for them. China is committed to them.But China has its own way of building industries. It subsidizes early entrants heavily, establishes standards, then removes incentives as production ramps up. That's what is happening now.The biggest winner looks to be BYD (OTCMKTS:BYDDF), which had sales of over 73,000 vehicles in the second quarter. Warren Buffett took a nearly 10% stake in BYD a decade ago when it was just a battery maker.While cars using fossil fuels succeed based on design and mass production techniques, electrics are all about the batteries. Getting the batteries right, getting them into mass production efficiently, makes everything else possible. That's what Tesla did. The company's secret sauce is all in its Nevada battery Gigafactory. That's the approach BYD is taking, focusing first on the battery, then on low-cost production standards. Li's Not MuskNio CEO Li seems obsessed with Tesla CEO Elon Musk. He launched dozens of companies before Nio, selling BitAuto, a provider of online services for China's auto industry, in 2013. * 7 Stocks to Buy In a Flat Market Before NIO stock's IPO, Li convinced many big companies to invest, including Baidu (NASDAQ:BIDU), Tencent and Lenovo (OTCMKTS:LNVGY). Forbes says he's worth $1.3 billion. But if most of that is in Nio, Li could wind up as China's Preston Tucker rather than its Elon Musk, which made for a great movie but a tragic story. Bottom Line on NIO StockInvestorPlace writers are unanimous: No to NIO stock.It should be cheaper, says Vince Martin. It may not survive its cash drain, says Mark Hake. It's a bust for the foreseeable future, writes Luke Lango. Keep saying "no," adds Thomas Niel.Sadly, they're right.Dana Blankenhorn is a financial and technology journalist. He is the author of the environmental story, Bridget O'Flynn and the Bear, 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 shares in AMZN. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post Impatient Investors Say 'No' to Nio Stock and China's Elon Musk Wannabe appeared first on InvestorPlace.
Things haven't been going too well for the "Tesla of China" in recent months. Nio (NASDAQ:NIO) has seen its stock price fall 53% since its IPO last year. The company did have a brief comeback in March when Nio stock rose as high as $10 per share. Source: Shutterstock InvestorPlace - Stock Market News, Stock Advice & Trading TipsSince then, its shares have been hovering around $3 as the company has dealt with several headwinds. Some of these issues are outside of the company's control and aren't specific to Nio alone. * 7 Industrial Stocks to Buy for a Strong U.S. Economy For instance, Tesla (NASDAQ:TSLA), Ford (NASDAQ:F), and General Motors (NASDAQ:GM) have all seen their stock prices fall as the trade war between the U.S. and China escalates. However, many of these issues are self-inflicted. Nio Deals With Unexpected Obstacles and LayoffsNio's stock price first started to tank after the company released its fourth-quarter earnings report in March. In addition to the earnings report, the company announced it would halt its plans to build its factory in Shanghai.Instead, Nio will continue to use its contract manufacturer, JAC Motors. JAC Motors made 12,775 ES8's for Nio in 2018 and received a fee for every vehicle it manufactured. The company had already paid JAC Motors over $14 million by the time it went public last year. Nio hasn't updated investors on whether the terms of that contract have been renegotiated or how much the company has paid its manufacturer since. Then in July, the automaker's deliveries fell substantially, mostly due to its recall of nearly 5,000 battery packs from a fire risk. Nio was able to recall all of the batteries ahead of its projected timeline, but sales took a hit. Nio only delivered 837 vehicles in July, making it the company's third-worst month in over a year.The company had to also resort to several cost-cutting measures which included laying off over 70 employees at two different Silicon Valley offices. It's worth pointing out that Nio does employ over 10,000 people worldwide, so the cuts weren't massive. Regardless, contraction is never something you want to see in a company you're investing in. And it's not something you would expect to see in such a young startup. Nio Stock Has Big Potential UpsideCan Nio stock make a lasting comeback? I think so. Many of the challenges Nio is facing are temporary problems, but the long-term potential of the stock is strong. Wall Street is concerned about China right now but that doesn't take away from the potential for the electric vehicle market there.Bloomberg reported that China expects 60% of all vehicles sold in the country to be electric vehicles by 2035. The company wants to be the first to lead the world away from combustible engines. China already sells half of all electric cars worldwide, so the country could be well on its way to making this happen.The company is only about a year out from its September IPO so it has time to work out some of these kinks. We'll know more about the company's short-term progress once Nio releases its next earnings report due Sept. 24. As of this writing, Jamie Johnson did not hold a position in any of the aforementioned stocks. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 3 Artificial Intelligence Stocks to Buy * 7 Industrial Stocks to Buy for a Strong U.S. Economy * 3 Beaten-Down Bank Stocks to Buy and Hold for the Long Term The post Don't Count out Nio Stock Due to Short-Term Headwinds appeared first on InvestorPlace.
Nio (NYSE:NIO) stock continues to move backward. While often compared to Tesla (NASDAQ:TSLA), Nio stock has failed to gain the traction of its U.S.-based counterpart.Source: THINK A / Shutterstock.com While the car may review well, competition and mounting problems with the company create questions about whether the company holds much of a future.Nio is not the "Tesla of China." I know a lot of people say it is, but sales figures and market share simply fail to back up that claim. It is actually one of nearly 500 electric car companies currently operating in China.InvestorPlace - Stock Market News, Stock Advice & Trading TipsAs of now, NIO constitutes less than 2% of the electric vehicle (EV) sales in China. They sold only 837 cars (not a misprint) in July, the latest month for which we have sales figures. It loses money and a lot of it. The company will not repeat the $10.36 per share loss of 2018. However, analysts still forecast $1.23 per share in losses in fiscal 2019 and 79 cents the next year. Nio Isn't TeslaTesla may have its issues. However, it remains a huge threat to NIO and its China-based peers. Tesla is currently building a Gigafactory in Shanghai. Most foreign car companies in China have to contend with a 10% purchase tax levied on their cars. Thanks to the Gigafactory and some lobbying by Mr. Musk, Tesla won an exemption. * 7 Deeply Discounted Energy Stocks to Buy Moreover, Tesla sold 95,200 vehicles in the second quarter. That hardly compares to a GM (NYSE:GM) or a Ford (NYSE:F), but it is a sales figure surpasses that of NIO by nearly 40-fold.Additionally, it released its information on July 2, right after the quarter ended. For NIO, we still have no sales figures for August. As Vince Martin mentions, the lack of second-quarter earnings numbers causes even more concern for Nio stock.It also has not announced a date upon which the company plans to release those figures. The foot-dragging may not indicate anything nefarious. However, companies who have good news to report typically do not hesitate to publish such information. Presence brings publicity to NIOHonestly, the biggest reason both myself and my InvestorPlace colleagues talk about Nio is that there is a stock to discuss. NIO happens to trade publicly, while virtually none of the others have introduced a stock that trades on U.S. markets. This is probably huge from a marketing standpoint as I doubt it would receive so much attention on this side of the Pacific otherwise. However, this has not translated into sales.Currently, the stock price stands near the $2.70 per share range as of the time of this writing. In fairness, the company has some attributes that have saved it from falling further. Analysts expect it to grow its revenue by 126.9% this year and 90% in fiscal 2020. The ES6 and ES8 have also impressed critics outside of China.But NIO needs more. With losses projected for years into the future, NIO may fail to ever get its act together financially. The quality of the car at least increases the odds of a buyout. Unfortunately, current stockholders have no way of knowing whether that would happen at 40 cents per share or $40 per share. Given current conditions, I would not buy Nio on this hope. The Bottom Line on Nio StockNio needs to stand out above its competition. The bottom line is that the company sells too few vehicles for anyone to take seriously. Once the Shanghai Gigafactory begins producing cars, Tesla itself will become the Tesla of China.For Nio to earn such a designation, it needs a massive increase in car sales. With the country in the middle of a trade war, intense competition, and a possible recession looming, it is hard to see where NIO will find those buyers.Mr. Martin describes NIO as the extremely cheap stock that should be cheaper. The poor sales and the slow pace of the earnings release make that a harsh but accurate description.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 * 7 Deeply Discounted Energy Stocks to Buy * 7 Stocks to Buy In a Flat Market * 10 Stocks to Buy to Ride China's Emerging Wealth The post Nio Stock Shows Little Potential for Getting out of Reverse appeared first on InvestorPlace.
Nio Inc – ADR (NYSE: NIO ) shares, which have been broadly lower since forming a double top in late July, were seeing some upward momentum since Wednesday. Nio, often known as China's Tesla Inc (NASDAQ: ...
It has been a bumpy few years for investors in Ford (NYSE:F) stock. The company blasted out of the recession, with Ford stock running up to as high as $17 in 2014. Since then, however, fate has not been so kind to Ford stock investors.Auto sales peaked a few years ago in North America. Meanwhile, Europe faces persistent economic weakness and the trade war has cast a huge shadow over the company's operations in China. Alarmingly, rival General Motors (NYSE:GM) has made huge inroads in that market as well. * 7 Tech Industry Dividend Stocks for Growth and Income In any case, add it all up, and Ford's stock price has been in a long steady decline. Since 2014, shares have lost nearly half their value, and with hardly any significant rallies along the way. While Ford pays a generous dividend, that hasn't been enough to make up for the stock's inexorable decline. Things may be about to take a turn for the better, however.InvestorPlace - Stock Market News, Stock Advice & Trading Tips The Auto Market Is Heating UpWhile the auto industry is hardly booming right now, things are perking up. Look at the most recent monthly data. Thomas King, a senior VP of data analytics for JD Power, said that: "Strong volumes coupled with higher average sales prices means that consumers will spend more purchasing new vehicles in August than any month in history."Encouragingly for the auto makers, the average sale price of vehicles is rising nicely as more customers buy SUVs. The extended weakness in oil prices has resulted in cheaper gasoline, and people are taking that into account when purchasing new vehicles. With Ford relying on the F-150 for so much of its profits, gas prices are a solid tailwind for the firm.Turning back to the figures, however, August numbers won't be enough to make 2019 a huge year for auto sales. JD Power and LMC Automotive are still forecasting a 1.7% decline in total light vehicle sales for 2019. But that's nearly flat, and is well ahead of some more pessimistic assessments earlier this year. F Stock's Huge DividendIf you look at all 500 companies in the S&P 500, Ford stock currently offers the 13th-highest dividend yield of all. Its 6.54% dividend yield is only a whisker behind Dow (NYSE:DOW) at 6.61% for being the highest-yielding industrial company in the index. Nearly all of the companies that yield more than Ford are deeply troubled businesses, such as slumping oil and gas companies or struggling firms in the retail sector.F stock, by contrast, is still performing reasonably well while offering its massive yield. Given its 2018 results, Ford can easily sustain its current dividend. Earnings were double its dividend payout from last year.Similarly, the company's cash flow after accounting for CAPEX left it enough room to pay more than twice the present dividend rate. We're not at peak auto sector profits right now either. That said, if another big recession comes around, the dividend might run into trouble; Ford had to suspend its payouts for several years during the financial crisis. Profitability a Significant Concern for Ford StockIt's not all great news for Ford stock though. The big issue facing the firm right now is that profitability has stalled out. While the company has grown revenues by roughly half since the financial crisis, net income has barely budged. It varies from year to year but there's been little in the way of meaningful growth.Ford is making a gigantic multi-billion dollar restructuring effort. Much of its focus is with international operations; the company is not earning money in various of its overseas markets. All these attempts at cost-cutting are angering some members of the labor force though. With the tight job market in the U.S. and Canada among other places, it may be difficult for Ford to save that much money by squeezing costs. Trade War Hits ProfitsThere's also the uncertainty of what will happen as the trade war intensifies. Through 2017, China accounted for around 20% of Ford's overall vehicle sales. This figure dropped in 2018, and will almost certainly struggle as long as the current icy relations persist.Europe is another key market. It makes up around 25% of Ford's overall vehicle sales. In recent weeks, we've seen Trump step up tariff talk toward Europe. We'll have to wait and see how far things escalate there. Also, a newly-planned trade deal between Europe and certain countries in South America including Brazil and Argentina may be disintegrating. That could affect Ford's supply chain logistics going forward.Speaking of supply chain logistics, there's also the NAFTA replacement deal -- USMCA -- to think about. In theory, Congress should approve it soon. It appears to have enough bipartisan support, however, democratic leadership hasn't let it come up for a vote yet. Canada hasn't ratified the USMCA either -- only Mexico has succeeded in that step. Should political issues arise and end up sinking the USMCA trade pact, it'd be a big blow for Ford stock. Ford Stock VerdictNowadays, it seems many investors are fascinated with upstart auto stocks like Tesla (NASDAQ:TSLA) and Nio (NYSE:NIO). It's important to keep things in perspective, however. Those firms are producing thousands of cars per month or quarter. Ford, by contrast, delivered nearly six million vehicles in 2018, and accounts for nearly 7% of the world's auto market and 14% of sales in North America.Ford survived the financial crisis and it's doing fine now, even with the downturn in the auto industry. For the F stock price to really shoot up, the company needs to obtain higher profit margins. This recent trend of revenue growth but flat profits does little for the share price.That said, the business is stable, the nearly 7% dividend is sustainable, and auto sales are starting to heat up. As a result, Ford stock could top $10 a share in coming months.At the time of this writing, Ian Bezek owned DOW stock. You can reach him on Twitter at @irbezek. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Best Tech Stocks to Buy Right Now * 10 Mid-Cap Stocks to Buy * 8 Precious Metals Stocks to Mine For The post Buy Ford Stock for Big Dividends and Improving Auto Sales appeared first on InvestorPlace.
Nio (NYSE:NIO) stock has traded sideways over the past month. Shares in the Chinese electric vehicle (EV) maker opened at $3.21 a share on August 2, and closed at $2.86 a share on August 30. Investor sentiment continues to be negative.Source: THINK A / Shutterstock.com Shares continue to trade more than 50% below their IPO price. Tesla (NASDAQ:TSLA) is close to opening its Shanghai facility. With EV sales slowing and economies weakening, NIO stock remains a long-shot. The company could pulloff a turnaround. But additional declines in the share price are also possible. Let's take a closer look, and see why it's smart to avoid Nio stock. Red Flags AboundThere are few catalysts for Nio stock. But there are plenty of red flags. As InvestorPlace contributor Mark Hake wrote last week, July deliveries were down 38% from June. Hake also highlighted the company's continuing cash burn. Nio's current cash position will not be revealed until the next earnings release, leaving investors in the dark about the company's solvency.InvestorPlace - Stock Market News, Stock Advice & Trading TipsRecent news does not paint a rosy picture. The company's co-founder (Jack Cheng) resigned. The company also fired 1,200 employees in an effort to cut costs. The macro situation looks tough as well. As noted above, Tesla will soon start making cars in China. But there is other competition for the Chinese EV market. Scores of startups have entered the game. Intense competition will make it hard to scale up to profitability. * 7 Tech Industry Dividend Stocks for Growth and Income The U.S.-China trade war adds additional risk to Nio stock. Economic fallout from the trade war could further reduce Chinese demand. A soft car market is the last thing a struggling EV startup needs. With these factors in mind, it seems like Nio stock faces multiple risks. But does this mean it's time to throw in the towel? Let's take a look at valuation, and see whether shares trade at a discount (or a premium). NIO Extremely OvervaluedDespite massive declines in the Nio stock price, shares remain overvalued. The company trades at an enterprise value/sales (EV/Sales) ratio of 3.91; Tesla is at EV/Sales of 2.1. Another Chinese-based, U.S.-listed EV maker is Kandi Technologies (NASDAQ:KNDI). KNDI stock currently trades at an EV/Sales ratio of 2.67.But comparing NIO to these peers is apples-to-oranges. Tesla is a better capitalized company, with a strong global brand. While not as well known, Kandi has a more diversified product offering. Along with EVs, Kandi manufactures all-terrain vehicles, as well as auto parts for electric vehicles.Meanwhile, NIO hemorrhages cash. The company's trailing 12-month (TTM) operating losses are $1.6 billion. The company posts negative gross margins. With the sales collapse in July, these negative gross margins may have accelerated further.It's hard to justify the valuation implied by the Nio stock price, even at $2.60 a share. The company's current market capitalization is ~$2.7 billion. But how much can the equity be worth as the company teeters on insolvency? * The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off For Nio to survive, it needs additional capital infusions. As I mentioned in my July 5 article, Nio has been bailed out before. State-owned fund E-Town Capital pumped $1.45 billion in a joint venture to help the company expand. E-Town could provide additional capital. But this would dilute current shareholders. Another possibility is bankruptcy. E-Town or another state-owned fund could step in and buy the company's operating assets. This would wipe out the value of Nio's equity. Bottom Line: Nio Stock Remains a Hard PassShares have fallen more than 80% off their all-time high of $13.80 a share. Investors may want to take a bet on a long-shot. But, most likely, there will be additional declines in the Nio stock price. The company has negative gross margins. It hemorrhages cash, and lacks any sort of competitive edge. With high levels of debt and a shrinking cash position, bankruptcy risk remains high.A turnaround is possible. But macro factors are not on the company's side. Without subsides, Chinese EV makers need natural market demand to sell their cars. Add in any complications from the trade war, and selling big ticket items in China seems like a gamble.Continue to avoid Nio stock. There are scores of better high-risk growth opportunities elsewhere.As of this writing, Thomas Niel did not hold a position in any for the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Best Tech Stocks to Buy Right Now * 10 Mid-Cap Stocks to Buy * 8 Precious Metals Stocks to Mine For The post Keeping Saying 'No' To Nio Stock as EV Maker has Few Catalysts to Help appeared first on InvestorPlace.
2019 has not been good to Nio (NYSE:NIO). Sales have been underwhelming. The company continues to burn cash. And the NIO stock price has plunged, dropping 55% so far this year and declining 70%+ from early March highs. In today's trading alone, it's down 5.8% as of this writing.Source: THINK A / Shutterstock.com The pressure has continued of late after a brief rally in July. But, to be blunt, it really should be worse. Bad news is mounting. Nio's very viability seems at risk in the near term. And there's an important question at the moment that hasn't been answered.NIO might seem cheap. The stock, as noted, has pulled back sharply. It trades below $3. As bulls are wont to argue, Nio is the "Tesla (NASDAQ:TSLA) of China" -- yet is valued at less than one-tenth its U.S. counterpart in terms of market cap.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Stocks to Buy for September But NIO isn't cheap. The market still values the company around $3 billion including net debt. There's little reason for even that valuation, particularly amid increasingly concerning news. This is a significantly challenged company in a hugely competitive market with macro worries layered on top. It can, and likely will, get worse for Nio. A Bad Month for Nio, and the NIO Stock PriceSince August 2, the NIO stock price has fallen 17.4%. It's declined 32.5% from intraday highs on July 10. Again, it really should be worse.Indeed, the news surrounding the company over the past month or so has been dreadful. From a macro standpoint, there's been no progress on the trade war front. And the yuan was devalued in early August, making Nio's eventual profits (if they arrive) less valuable to U.S. investors. Chinese macro concerns remain, leading to volatility in even more established plays like Alibaba (NYSE:BABA) and JD.com (NASDAQ:JD).From a company-specific perspective, the news in August was even worse. July deliveries of just 837 vehicles disappointed. The 'retirement' of Nio's co-founder followed two other key executive exits the month before. A week later, the company announced it was laying off 1,200 employees -- nearly 14% of its workforce.None of those news items suggest a growth company, which Nio has to be. The NIO stock price, after all, is still ~2x revenue (again, including net debt). That might sound cheap -- but for a sharply unprofitable automotive company that doesn't even manufacture its own vehicles, it's not.Rather, this sounds like a company that needs to save cash, has serious strategic questions, and isn't selling nearly enough cars to come close to covering its expenses.That in turn undercuts the argument that a trade war resolution somehow fixes Nio's problems. There are 486 electric vehicle manufacturers in China, as Bloomberg noted earlier this year. That's a competitive issue not a temporary geopolitical problem. Where Are Earnings?After all that bad news, there's one odd piece of 'no news' at the moment: Nio's second quarter earnings. Nio reports on a calendar basis. But more than two months after its quarter ended, the company still hasn't even announced an earnings release date.To be sure, that doesn't necessarily mean anything nefarious. Bitauto (NYSE:BITA), also founded by Nio co-founder Bin Li, isn't reporting until Thursday. But it does seem to suggest that at the least Nio doesn't have much good news to report. It may also be that the company is working toward something else -- perhaps a financing -- before the release.Again, this is a company whose current burn rate suggests it may have less than a year's worth of cash remaining. That rate should moderate after the layoffs, to be sure. But any uncertainty for this kind of company seems like bad news. And it's possible, with more trade war drama over the Labor Day weekend, that the lack of an earnings release will lead to more questions - and more selling. Sell NIOWherever an investor looks right now, the news seems to be negative for NIO stock. The simplistic bull case here -- that Nio can benefit from EV growth in China, particularly on the high end -- in theory can still play out.But industry leaders don't lay off 13% of their employees. Co-founders don't 'retire' to go work for a supplier. Earnings reports are released on time. * 7 Best Tech Stocks to Buy Right Now This is not the story that some bulls seem to think that it is. And at a market cap of $3 billion, that problem still isn't priced in.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Best Tech Stocks to Buy Right Now * 10 Mid-Cap Stocks to Buy * 8 Precious Metals Stocks to Mine For The post Nio Stock Is Extremely Cheap -- But It Should Be Cheaper appeared first on InvestorPlace.
Even though I'm not a fan of electric vehicle maker Nio (NYSE:NIO), I understand the allure of the Nio stock price. At one point earlier this year, shares closed up just above $10. And in September of last year, we saw NIO finish a session near $12. Today, you can pick up this equity for under $3.Source: THINK A / Shutterstock.com Not only that, fundamentally, the EV maker seems like a reasonable contrarian bet. As many analysts and observers love to say, NIO is the Tesla (NASDAQ:TSLA) of China. Admittedly, Nio's cars are drop-dead gorgeous. They also offer many of the same features and innovations as Tesla cars, but at a comparative discount.Then again, there's usually a reason why a company's equity utterly collapses. More often than not, it has nothing to do with the markets not seeing an opportunity. In NIO's case, I believe the hype around EVs has helped push the Chinese automaker to unrealistic expectations.InvestorPlace - Stock Market News, Stock Advice & Trading TipsHere are three reasons I'm still avoiding NIO stock despite its already steep decline. China Is (Sort of) the Biggest Automotive MarketWhenever an extensive discussion about the Nio stock price arises, you'll invariably hear about China being the biggest automotive market. And it's a true statement. In fact, with a population size of 1.4 billion people, China is the biggest market for pretty much anything. * 7 Stocks to Buy Down 10% in the Past Week So, why am I so down on Nio stock? For one thing, China's leadership in automotive sales doesn't really translate well for NIO. We often have this image in our heads that China's economy is the next big thing of the east. While for some industries, it's lived up to this billing, for automobiles and particularly EVs, it's a different matter.Around 35% of the country's labor force works in the agricultural sector. That compares to only 2.5% in the U.S., and I'm sure other developed nations have similar stats. Thus, this automotive market isn't nearly as robust as you think it is.Sure, Chinese farmers need transportation too. But EVs aren't very practical in the countryside. Moreover, they're incredibly expensive relative to traditional fossil-fuel powered cars. For instance, NIO made a big fuss when its ES8 SUV significantly undercut Tesla's Model X. But at nearly $68,000, an ES8 isn't exactly chump change. And that bodes poorly for the Nio stock price, especially if we head into a recession. Limited EV Infrastructure Hinders Nio StockOne of the reasons why Wall Street pummeled the Nio stock price this year is due to a critical delay. No matter how cool EVs are, or how much money they save on gasoline, their integration will always be limited by the snail pace of infrastructure.And I'm being completely fair: This lack of infrastructural development is not Nio's fault. However, until the world decides to make a shift toward EV-centric facilities, it's pointless to risk too much in NIO stock.This is also the same reason why lately I've been bearish on Tesla. For example, one year ago, consultation firm McKinsey & Company prepared a report on EV demand in the U.S. Based on consumer trends, EVs have exploded in popularity. However, one of the bottlenecks that McKinsey cited was infrastructure buildout.Simply put, the demand is there, but the platform isn't. This is a repeated scenario throughout the world, negatively impacting the Nio stock price.Admittedly, with more consumers driving EVs, this should incentivize the development of public charging stations and other infrastructural needs. However, another bottleneck is the charging station's lack of monetization.As Fast Company put it, no one has found a way to make EV infrastructures economically viable. Until this matter is resolved, it represents another critical delay for NIO. Recession Might Tank Gas PricesAside from their next-generation technologies, EVs have enjoyed a massive advantage over fossil-fueled cars. They are cheaper and sometimes free fuel.Although I just mentioned that the EV infrastructural buildout is slow, progress is still being made. For instance, several Target (NYSE:TGT) stores offer free EV charging stations. In one of my local Target stores, I see rows and rows of Teslas waiting for their turn to replenish their batteries.To me, it seems like a stressful way to spend a Sunday afternoon. However, if I could get free fuel for my German gas guzzler, I suppose I'd join their ranks.But that's only if it made economic sense. If the price of gasoline drops lower, my inclination to fight traffic and wait in line becomes significantly reduced. Hence, Nio stock has a distinct recession risk.If we suffer a global downturn, chances are gasoline prices will plummet due to oversupply and lack of demand. Should this trend continue, the incentive to buy a comparatively impractical EV lessens. With all the other problems facing EVs, it's best to leave NIO stock in park.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 * 7 Stocks to Buy Down 10% in the Past Week * 15 Retail Survivors to Buy for the Long Run * 7 Stocks That Wall Street Thinks Could Rise 50% Or More The post 3 Reasons Why Iam Still Leaving Nio Stock in the Driveway appeared first on InvestorPlace.
Despite the recent turmoil, the PowerShares QQQ ETF (NASDAQ:QQQ) is still up 22% this year, but is up just 2% over the past 12 months. For Nio (NYSE:NIO), it's been a far worse run. Nio stock is down more than 50% both this year and over the trailing 12 months.Source: THINK A / Shutterstock.com Lower-than-expected growth, high cash burn and worries over the Chinese auto market have all been negative catalysts for Nio. For a while, Nio was being called the Tesla (NASDAQ:TSLA) of China. Thus, it doesn't help that Tesla has been struggling too, down 33% in 2019.The all-electric car maker Nio was supposed to enjoy robust demand in the world's largest electric car market. That hasn't really been the case. And with Tesla making rapid progress on a new production facility in Shanghai, there are fresh concerns regarding Nio's staying power.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe charts also present another worry, this of the make-or-break kind. Trading Nio StockIn June, the Nio stock price finally put a bottom, carving out a nice base near $2.50. While down some 80% from its highs a few months ago, the carnage finally ended. After some better-than-expected figures from the company, NIO quickly climbed to $4 in July. * 7 Stocks to Buy Down 10% in the Past Week Since then, Nio stock has been making a series of lower highs, forming a downtrend line of resistance (blue line). Shares have also failed to hold the 50-day or 20-day moving averages as support.In short, the name has been weak after its initial big jump, where shares ran some 60% in just a few days. Those are the types of moves you can see with sub-$5 stocks, though. Click to EnlargeIt's not all doom and gloom, however. The Nio stock price has continually found support near this $2.75 area. Even amid all the trade war drama between the U.S. and China -- which was really weighing on Chinese equities like Alibaba (NASDAQ:BABA), JD.com (NASDAQ:JD) and others -- this support level has held up.That's the good news. The bad news is that Nio stock is trapped in a descending triangle pattern, which is a bearish trade setup. With resistance squeezing NIO against support, bulls will really need to step up to the plate. If they don't and support gives way, then $2.50 base support will be called upon once more. Below it and NIO is officially in no man's land.If bulls can push Nio stock over resistance, their next task is to get it north of the 50-day moving average. Above both and investors may look to squeeze shares as high as $4, up about 27% from the 50-day moving average. Valuing NIOJust because NIO is off its lows doesn't mean it's doing all that well. Shares are still down 75% from its highs made last year and 71% from this year's highs.The Chinese auto market used to be a pillar of strength, enjoying decades of growth. That's not the case anymore. Monthly auto sales declined for the 13th straight month in July, adding to the recent turmoil in the space. Last month, sales fell 4.3%, which is typically bad news to most observers. However, some view it as a possible turning point in the market.That will need to be the case if Nio wants to have a chance at making a comeback. That's especially true given its recent news. Amid the softness of the Chinese auto market, Nio delivered just 837 vehicles in July. Ten days later, the company announced that it will slash its workforce, cutting about 1,200 employees as it looks to get down to around 7,500 workers.Lastly, company co-founder Jack Cheng announced that he's leaving NIO a few weeks ago. It hasn't been a good stretch and having your co-founder walk less than a year after going public isn't a good look.While Tesla has had its struggles, it has a heck of a promoter in Elon Musk. It's allowed Tesla to raise money countless times and with an elevated share price, it's not hard to do. At sub-$5 though, it's a tough task for Nio.So, what's the bottom line? Those that feel the need to play this speculative holding, wait for the chart to tip its hand.Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Kenwell did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Buy Down 10% in the Past Week * 15 Retail Survivors to Buy for the Long Run * 7 Stocks That Wall Street Thinks Could Rise 50% Or More The post Nio Stock Is Facing a Make-or-Break Trade Setup appeared first on InvestorPlace.
Nio Inc (NYSE:NIO) the Chinese electric vehicle (EV) company is faltering. Not only were its July deliveries disappointing (down 38% from June) but there is no indication of whether NIO stock has enough cash to survive its massive cash burn.Source: THINK A / Shutterstock.com Here is what we know about Nio's cash position. Five months ago NIO stock had just U.S. $1.123 billion on its balance sheet. The company lost $390 million on a net income basis in its first quarter. That works out to $130 million per month! Five months later, the cash burn could theoretically have reduced the cash balance by roughly $650 million, or 57% of its cash.Three things bother me about this.InvestorPlace - Stock Market News, Stock Advice & Trading Tips* As is usual for most Chinese listed ADRs in the U.S., Nio does not produce any quarterly cash flow statements. The SEC does not require this of foreign companies. So the actual cash burn may greater than $130 million per month. We don't know the exact cash burn rate at NIO.* Deliveries since Q1 have been down dramatically. That means the cash burn has likely increased dramatically.* Not only do we not know when the June quarter earnings statement will be released, it will still not tell us what the NIO's current cash balance is right now. NIO had $1.34 billion in short and long-term debt as of March 31, and additional $353 million in short and long-term operating lease liabilities. So it owes at least $1.7 billion, not including normal trade liabilities. * 10 Stocks to Buy for September That means its cash is $473 million and interest bearing liabilities are $1.7 billion, as of right now, without further information from the company. Considering that the company is burning cash, this is a classic definition of insolvency. Implications of InsolvencyDirectors in most non-U.S. western countries cannot declare bankruptcy at the point when cash runs out. They have to declare bankruptcy when they as directors know that the company is insolvent and has no ability to pay its bills. This means that they are responsible for defending creditors' interests rather than shareholders' once they suspect that that company is insolvent. Otherwise they could be accused of "trading while insolvent," which is a common fraud in most non U.S. commercial codes.I don't know whether China has such a legal commercial code constraint. It may be that the directors of the company, albeit less one of the founders, are scrambling to find funding.One of the reasons why a director would resign is to avoid being accused of a fraud when a company is put into insolvency or "administration" by one of its large creditors. Is that why the co-founder left earlier this month? Investors in NIO Stock Need to Be RealisticOn the one hand, the possibility of insolvency may not necessarily mean that NIO stock is worthless. That would depend on whether the company can find a suitor willing to not only pay off its debts but also pay something to the NIO stock shareholders.On the other hand, if they wait until the directors or a large creditor put the company into insolvency or administration, Nio's stock would then be worthless. Then a suitor for the company could negotiate with all the creditors to buy the assets it wants, and not have to worry about the debts or shareholders.Considering that auditors do not have to audit quarterly statements, it may be that Nio has some time while it holds on for dear life. But NIO stock holders might want to take action now. Everything Depends on the June Quarterly StatementsIf Nio does not deliver its June end statements within the next week or so, speculation will begin to mount that there is a problem with the company's funding issues.If the company can show that it has the ability either as of August month end to fund its continuing losses then the idea that the company is likely insolvent can be put to bed.Nio is an extremely speculative stock in a country with bankruptcy laws that are unfamiliar to Americans. Not to mention China is currently tangled in a trade war with the U.S. If Nio is running out of money, which it likely is, what do you think you ought to do?As of this writing, Mark Hake, CFA does not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Buy Down 10% in the Past Week * 15 Retail Survivors to Buy for the Long Run * 7 Stocks That Wall Street Thinks Could Rise 50% Or More The post Nio Stock May Not Survive Its Cash Drain appeared first on InvestorPlace.
Recessions don't necessarily spell doom for all equity holdings. As I've argued before, some companies, particularly those levered to secular industries, may buffer the storm. After all, everyone has to eat, even during a market downturn. That said, there are certainly investments that are the worst stocks to buy in a trade-war fueled crisis.Of course, any company that depends on China to make ends meet represents a red flag. When the U.S.-China trade war first started, many political observers held hope that the two sides will negotiate a deal.For one thing, Trump supposedly made his fortune through wheeling and dealing. Second, and more importantly, the world's top two economies would incur severe fiscal pain with tit-for-tat tariffs. But with national pride and political reputations on the line, the two have instead escalated the conflict. And that set the tone for the worst stocks you must avoid.InvestorPlace - Stock Market News, Stock Advice & Trading TipsWorse yet, this escalation shows no sign of abating. Just recently, China announced a fresh round of tariffs on $75 billion worth of U.S. goods. Another round of tariffs will occur at the beginning of next month.Not surprisingly, the acrimonious announcement infuriated President Trump. Taking to Twitter (NYSE:TWTR), Trump promised new tariffs to take effect on October 1, impacting $250 billion worth of goods. Instead of the previous 25% tax rate, it will bump up to 30%. Logically, this has bolstered the negative argument for this crisis' worst stocks. * 7 Stocks to Buy Down 10% in the Past Week Just as you would with positive-leaning investments, you shouldn't play games with these worst stocks. Avoid them for now while the trade war rages on. Apple (AAPL)Source: thanat sasipatanapa / Shutterstock.com Although consumer electronics giant Apple (NASDAQ:AAPL) is up big this year, it took a punishing blow last Friday. On that session, AAPL stock dropped nearly 5%. And with that move, shares suddenly don't look so hot anymore. But technical damage isn't the only reason why I think it's one of the worst stocks to engage.First, prior to this trade war escalation, sales of smartphones of all varieties slipped to multi-year lows. Of course, this is a major headwind for all competitors in the space. But for AAPL stock, the underlying company has been attempting to diversify its revenue allocation. So far, this effort has only netted modest results. Overall, Apple's iPhone still represents the lion's share of revenues, and that exposes the company to substantial China risks.Second, with President Trump recently announcing his retaliatory tariffs, the narrative for AAPL stock has worsened. Plus, Trump "ordered" American companies -- via Twitter, of course -- to start making their products in the U.S. I don't take this seriously. However, it does suggest a long trade war ahead of us, which is why AAPL is among the worst stocks to buy right now. Tesla (TSLA)Source: franz12 / Shutterstock.com Shares of Tesla (NASDAQ:TSLA) have been all over the map this year. Throughout most of the first half, TSLA stock skidded off the rails, leaving a wake of disheartened stakeholders. But in July, the equity bounced back, giving embattled shareholders a quick burst of optimism.Unfortunately, it was short lived. TSLA stock plummeted in late July, and the selloff continued throughout most of August. Last Friday, shares dropped 5%, reminding investors why this is one of the worst stocks of 2019.I do believe that Tesla CEO Elon Musk is a genius. But I also know some contrarians are out there waiting to pull the trigger. So if I may offer some advice, I would stay away from TSLA stock during this heightened environment. * 7 Tech Industry Dividend Stocks for Growth and Income Here are two reasons why. First, while electric vehicles (EVs) represent innovative technologies, the infrastructure isn't ready to support their mainstream integration. Second, China is the biggest automotive market in the world. Under such a bitter environment, Tesla really has no chance of penetrating this vital arena. Nio (NIO)Source: THINK A / Shutterstock.com If Tesla is one of the worst stocks to hold against a coming recession, don't expect much from the Tesla of China, more widely known as Nio (NYSE:NIO). On a year-to-date basis, NIO stock is down more than 52%.But like with Tesla above, speculative contrarians are probably licking their lips. No matter what you think about the company or stock, Nio-branded cars are undoubtedly beautiful machines. Combined with their exposure to China's massive automotive market, an economic recovery there would skyrocket NIO stock.Still, I wouldn't get too excited. First, China's automotive sales plummeted to scary levels during the first half of this year. I don't think those losses can just be patched up with some diplomacy. Second, the Chinese government has introduced policies that essentially scale back prior limitations against buying fossil-fueled cars.As I argued previously, that takes away a huge incentive to buy EVs. Additionally, given this platform's new and relatively unproven nature, I'm not too hot on NIO stock. iQiyi (IQ)Source: Jarretera / Shutterstock.com Without recession fears, iQiyi (NASDAQ:IQ) has an interesting narrative. As a Chinese content-streaming company, it naturally draws comparison to Netflix (NASDAQ:NFLX). On paper, iQiyi has 100 million subscribers, with the vast majority of them being paying customers. That in part has supported the bull case for IQ stock earlier this year.But even within a recession, IQ stock has something to offer. As I mentioned in my recent story about Roku (NASDAQ:ROKU), companies that provide cheap entertainment are incredibly relevant during downturns. In both the Great Recession and Great Depression, the movie industry brought smiles and levity to dark circumstances.But will this dynamic benefit IQ stock if we enter a recession? Admittedly, it might do just that. However, I noticed some problems with the iQiyi narrative. One of them is that revenue growth has recently flatlined, which doesn't inspire confidence. * 10 Companies Using AI to Grow Moreover, China is a huge market for content piracy. Thus, if the Chinese want cheap entertainment, they can find it. Under Armour (UA, UAA)Source: 2p2play / Shutterstock.com At the beginning of this month, I mentioned that Under Armour (NYSE:UA, NYSE:UAA) was one of the most shorted stocks. I really should have doubled down and mentioned that it was one of the worst stocks to consider, even as a contrarian. Between the publishing date of my article through August 23, UAA stock dropped 17%.And if you look at the charts since late July, you can see a straight drop down for UAA stock. Of course, most folks will point to the sports apparel-maker's mixed results for its fiscal second-quarter earnings report. At the time, the company pared expected per-share profitability loss, but missed slightly against revenue. However, Wall Street punished UAA stock for its downbeat guidance.But what makes UAA among the worst stocks is its China risks. Let's be blunt. In the U.S., the federal minimum wage is $7.25. Assuming 40-hour weeks, that translates to $1,257 a month. In China, the highest minimum wage is $358 per month.That's a 251% monthly differential that the trade war threatens. And if that goes, I don't think UAA stock stands much of a chance. Adidas (ADDYY)Source: 2p2play / Shutterstock.com Normally, I'd offer an established sports-apparel company like Adidas (OTCMKTS:ADDYY) as a counterweight to Under Armour. But with a possible recession around the corner, I'm very hesitant on ADDYY stock, along with category rival Nike (NYSE:NKE). Ultimately, this trade war doesn't just impact the worst stocks in the U.S. or China; instead, it's a global pressure point.Not necessarily known for subtlety, the Germans laid it out as bluntly as they could: unless some miracle materializes, the country is headed toward recession. And with Germany being the most stable, robust economy of the European Union, that spells trouble for the entire region. In this circumstance, I don't think people will gravitate toward outrageously priced premium-label sneakers. And that makes ADDYY stock a candidate for one of the worst stocks at this juncture. * 7 Tech Industry Dividend Stocks for Growth and Income I'll freely admit that I'm no geopolitical expert. But if I'm interpreting the sentiment at the G7 summit correctly, most nations are tired of the Trump administration. Thus, the trade war threatens to increase its scope. Either way, you should probably sit out ADDYY stock until the coast clears. DR Horton (DHI)Source: Casimiro PT / Shutterstock.com One of the easiest candidates for worst stocks in this potentially arriving recession is DR Horton (NYSE:DHI). Now, I'm not necessarily picking on DHI stock. However, billed as "America's largest homebuilder," I don't have much confidence in the name. After all, buying a new home is the last thing people will be thinking about in an economic downturn.That said, I understand why DHI stock appeals to contrarian thinkers. For one thing, shares have done very well this year thanks to the economic recovery. Secondly, the Federal Reserve has incentivized home purchases through cutting benchmark interest rates.But if this trade war leads to a recession in the U.S., we could see unemployment rise due to layoffs. Naturally, this would inspire belt-tightening actions which aren't conducive for durable acquisitions like real estate. Plus, who'd want to leverage themselves to a mortgage under a shaky economy? For this reason, I'm avoiding DHI stock. Macy's (M)Source: Jonathan Weiss / Shutterstock.com I was recently at one of San Diego's most popular shopping malls when I realized something: it was a Saturday afternoon, yet getting into the parking lot and finding a good spot was remarkably easy. Walking around, I couldn't help but notice that the atmosphere was dead.Granted, my observations are admittedly anecdotal. However, the downturn in brick-and-mortar retail is verifiable, which is why I'm hesitant on Macy's (NYSE:M). Recently, M stock has plunged into absolutely scary depths. Moreover, shares have traded inside an ugly bearish trend channel late July of last year.There are two problems that are weighing on M stock. First, as I mentioned above, foot traffic at shopping centers has been steadily declining. Unfortunately, malls are becoming irrelevant thanks to Amazon (NASDAQ:AMZN) and other e-commerce retailers. * 7 Stocks to Buy Down 10% in the Past Week I might overlook this problem, though, if the trade war wasn't raging. Certain items like clothing and footwear lend themselves to the physical retail platform. However, M stock has serious China risks because that's where many of their products originate. With tariffs causing price hikes, shoppers will move elsewhere.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 * 7 Stocks to Buy Down 10% in the Past Week * 15 Retail Survivors to Buy for the Long Run * 7 Stocks That Wall Street Thinks Could Rise 50% Or More The post The 8 Worst Stocks to Buy Before the Trade Turmoil Cools Off appeared first on InvestorPlace.
A little over three months ago I offered some comfort to early Nio (NYSE:NIO) investors who had ridden out the steep post-IPO selloff. It wasn't a recommendation to buy into Nio stock, or even a suggestion that the Nio stock price would inevitably improve in the foreseeable future. Rather, it was a simple reminder that nothing about the sea-sickening volatility thus far was unusual or surprising.Source: Shutterstock As far as assurances go though, what's happened in the meantime is anything but comforting.It's not devastating to be clear. The young electric car company can dig its way out its hole. But, Nio has dug itself deeper into that hole at a point where it really didn't need any more obstacles to overcome.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Nio Facing a Demand HeadwindIt's easy to blame the tariff war for Nio's woes, and if we're being intellectually honest, that is a key part of the organization's woes. July's consumer spending growth in China fell to a pace of 8.6%, down from June's 9.8%. A surge in July automobile sales, driven by steep discounts, inflated the number. * 7 Tech Industry Dividend Stocks for Growth and Income The figure is still robust to be sure, but it's a significant slowdown nonetheless that many weren't expecting. It's also part of what appears to be a developing trend.On the flip side, it's likely that Nio was going to have to lay off the 7500 employees it announced it would be cutting loose earlier this month regardless of China's economic status. As early as March Nio acknowledged the demand for is ES8 had been unexpectedly weak, so much so that it scrapped plans to build a new manufacturing plant in Shanghai. The company and investors arguably saw that headwind well before it made the announcement though.The curious aspect of the story: Tesla (NASDAQ:TSLA) isn't feeling the same headwind. Through June of this year, its sales in China grew 40% year-over-year.Whatever the case, Nio's decision looks troubling, for investors as well as would-be buyers that don't want a product made by a company that may or may not be around to offer service in the future.A spate of battery fires this year and an eventual recall didn't help Nio's image either. Nearly 5000 ES8 vehicles required an outright replacement of their battery packs, the lifeblood of any EV. A Bleak Present for Nio StockCompany founders step down from leadership roles all the time. Broadly speaking though, they don't do it at a point when that company's leading visionaries need to stick around and put the organization on solid footing.That's what makes co-founder Jack Cheng's retirement just five years after helping get Nio off the ground more than a bit startling.Cheng is neither CEO nor president, two key positions that would understandably be offered to outsiders given Nio's slow start in an environment that's not been frothy for EVs, but certainly not disastrous either. Rather, Cheng's official position is "Executive Vice President," an important but not necessarily integral position that would allow him to see the development of Nio through to the end. The announcement cited age as a factor in the decision; he's 61 years old.The odd part about the age-based retirement? He's not exactly retiring. Though his level of involvement in the organization is not yet entirely clear, Cheng will be working with a company called XPT, which makes components for Nio's electric automobiles.There are multiple interpretations of what could be considered a downward-sloped lateral move. One of them is, of course, is that Nio is a proverbial sinking ship.To that end, two other key personnel exits (software head Li Zhang and U.K.'s managing director Angelika Sodian) revealed in July underscore the notion Nio's struggle is more than just a typical sluggish start.Again, if nothing else, it just looks bad, and gives doubters something to latch onto. Looking Ahead for Nio StockI stand by my comments from May. None of this is terribly surprising or unusual, even if it is upsetting. Tesla went through it, as did Twitter (NYSE:TWTR). Uber (NYSE:UBER) is going through it too. Many companies and executives aren't actually ready for post-IPO life. They go public anyway. Welcome to the game.I also stand by my other comment made in May though. That is, Nio will survive, and eventually thrive. It may be ugly getting to that point, but electric vehicles are the inevitable future. Nio, despite all of its problems, is a respectable brand.I certainly wouldn't be in any hurry to scoop up Nio stock though.As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can learn more about James at his site, jamesbrumley.com, or follow him on Twitter, at @jbrumley. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Tech Industry Dividend Stocks for Growth and Income * 7 Stocks the Insiders Are Buying on Sale * 7 of the Worst Stocks on Wall Street The post Even with This Dip, There's No Good Reason to Buy Nio Stock appeared first on InvestorPlace.