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Some people out there think that the stock will fall around NIO day.
I am a NIO believer.
NIO Is More Expensive Than Tesla
http://stockmarketrevolution.com/wp-content/uploads/2020/12/NIO-Is-More-Expensive-Than-Tesla.pdf
In 2020, NIO (NIO)’s share price has gone from less than $4 to more than
$45-$50. It is the time that somebody stands out and notes that the
company may be overvalued. NIO trades at 21x-23x sales, with Tesla
(TSLA) trading at close to 16x. The company does not even show annual
gross profit margin. In addition, the company reduced its headcount in
2019, and cut its R&D expenses. I don’t see how that will help increase
sales growth from 2020. To sum up, if you are not here to hold the stock
for five years or more, you may sell your shares.
NIO
China-based NIO is a manufacturer of premium smart electric vehicles. It
is an established fact that NIO is widely known for being the chinese
competitor of Tesla.
The company started making deliveries of its first car, the ES8, in June
2018. In December 2018, NIO launched the ES6, a smaller and more
affordable model than ES8. The first ES6 models were received in June
2019. Finally, in December 2019, the company launched the EC6, its last
model, which users started receiving in September 2020.
Very recently, the company also launched the 100-kilowatt-hour battery
pack, which can be used by all NIO drivers. The new system offers driving
rage for the new models. It provides a driving range from 580km to 615
km.
Investors who had a look at the prospectus may have seen the following
text. NIO promised to deliver one new model each year. That would be
extremely beneficial for shareholders. More models means more market
size, and most likely more future sales. Having noted this, let me mention
that in 2019, the company reduced its headcount. In addition, it appears
to be reducing the amount of money allocated to research and
development. With these actions, I don’t see the company delivering a lot
of new models each year. Companies that grow massively don’t usually
reduce their headcount:
Our goal is to launch a new vehicle model each year for the near future as
we plan to offer our users more choices to suit their preferences and
target different segments within the premium electric vehicle market in
China. We plan to mainly sell our vehicles in China for the near future.
Source: Prospectus
There is another clear fact that may limit the company’s sales growth. As
of June 30, 2020, the company reported 320k charging piles in China.
These are charging stations, which NIO drivers can use. The Chinese
government has a target of 4.8 million charging piles. This means that
China is still far from reaching sufficient number of stations for EVs. I hate
being the person pointing this out. However, if the company cannot offer
sufficient stations, I would not expect that many clients in China will buy
cars from NIO. Shareholders need to clearly understand this risk. In my
view, it makes sense to invest in electric vehicles in China only when the
government offers sufficient infrastructure.
Tesla trades at 12 Forward Sales with 14% sales growth. NIO is very undervalued as compared to Tesla.
NIO trades at 12.36x Forward Sales with 51% sales growth.
In the following months you will see NIO grow quite a bit.
You guys need to remember 2013...
Companies from China had to deal with the same issues regarding their auditors... The Ministry of Finance from China had to talk to the PCAOB, and everything was solved. I don't see why this time it will be very different...
In May 2013, the PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the CSRC and the PRC Ministry of Finance, which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by the PCAOB, the CSRC or the PRC Ministry of Finance in the United States and the PRC, respectively. The PCAOB continues to be in discussions with the CSRC and the PRC Ministry of Finance to permit joint inspections in the PRC of audit firms that are registered with the PCAOB and audit Chinese companies that trade on U.S. exchanges. On December 7, 2018, the SEC and the PCAOB issued a joint statement highlighting continued challenges faced by the U.S. regulators in their oversight of financial statement audits of U.S.-listed companies with significant operations in China. However, it remains unclear what further actions the SEC and the PCAOB will take to address the problem.
Last Prospectus of NIO.
“In view of the growing market demand for our competitive products, we are motivated to continuously elevate the production capacity to the next level. We expect to deliver 16,500 to 17,000 vehicles in the coming fourth quarter.”
Last quarter ! This is big !
NIO Is More Expensive Than Tesla
http://stockmarketrevolution.com/wp-content/uploads/2020/12/NIO-Is-More-Expensive-Than-Tesla.pdf
NIO is cheap - New Research
http://stockmarketrevolution.com/archives/15083
Some people did talk about the stock ...
While KNDI (KNDI) appears quite cheap at 1.5x 2020 sales, I am quite skeptical about the company’s future. Both the Coronavirus and the decline in the oil price are not great for the stock. The company has not clearly stated it in the last annual report. Besides, the way KNDI presents its net income figure does not look good to me. Adding the most recent debt conversion and sale of assets, KNDI is not a buy, but may be a short.
Kandi Technologies And The Most Recent Sales Report
Kandi Technologies designs, manufactures and commercializes electric vehicle products (“EV”) in China.
I know that American investors are sometimes skeptical about financial figures communicated by the Chinese companies. While I understand their concerns, analysts should continue to assess the numbers released by Chinese companies. In 2019, the company’s most relevant products were EV parts, which represented 81% of the total amount of sales. Besides, 81% of the total sales originated from China. As mentioned in the last annual report, I appreciate that the amount of sales from one of the company’s affiliate companies was reduced to 11.7% of the revenue. With that, I encourage investors to review the amount of sales from affiliated companies. We don’t know Kandi’s influence over these parties. Remark that in 2018, the total amount of sales from an affiliate was equal to 43%.
With regards to the bottom line, investors need to be very careful. The company included two non-recurring items; the gain from equity dilution in the affiliate company and gain from equity sale. Including these two items, we get a net loss of -$7.18 million. However, if we don’t take into account these gains, I get a net loss of approximately -$31 million. It is a bit worrying. As compared to 2019, net losses multiplied by more than 5x. In my view, the fact that Kandi did not want to show the net income without non-recurring items makes it even worse.
Stock Market Revolution
NIU: Shorts Are Everywhere
Why Are Shorts Taking Positions?
NIU (NIU) is a manufacturer of smart e-scooters from China. Investors should distinguish the company's name from that of NIO (NIO), the chinese manufacturer of cars. Interestingly, NIU took a name, which is very close to that of a leading company in China.
NIU presents its business model with the following words:
We currently design, manufacture and sell high-performance electric bicycles and motorcycles. We have a streamlined product portfolio consisting of seven series, consisting of four e-scooter series, which are our key products and contributed to the majority of our sales, two urban commuter electric motorcycles, and one performance bicycle series. We have adopted an omnichannel retail model, integrating the offline and online channels, to sell our products and provide services.
The company sells e-scooters and a mobile app. The manufacturer has not designed anything extremely new. In the nine months ended September 2020, the company's R&D expenses were equal to RMB48 million. Hence, the amount of R&D expenses is very limited, representing only 3% of the total amount of sales in the cited period. If you invest that amount of dollars, you cannot really create new technology. Without new technology, most investors will not really expect a significant amount of future sales. It really explains why short sellers are taking large positions in NIU.
That's not all. The company does not seem to be receiving good feedback from clients. I checked the feedback given by NIU clients on the Apple store website. Many customers mentioned that the app often loses connection with the e-scooter. They have reported many other bugs. NIU is a young start-up, so I understand that the app may have certain bugs. With that, I don't see why the company is trading with a market capitalization of more than $2 billion in New York. Companies with such large valuation are massive businesses. If they are software companies, their apps are usually bug free.
Read some of the issues reported in the lines below. This client noted that the battery level reported by the app was not correct:
Excitedly bought a brand new NIU 2 weeks ago and the battery is a dud! All of a sudden just wouldn’t work. NIU won’t immediately replace it even though I just purchased the bike 2 weeks ago. They have to diagnose it first to see if they can fix it before they decide whether or not to give me a new battery. I don’t want a repaired battery on a brand new bike! NIU company should show good customer service and immediately replace it with a new battery. Such a disappointment from a supposed high end company! What’s more stupid is that the APP says my battery is at a 98pt level. Ummm, wrong! Totally inaccurate!
In 2018, another client called Mikedaddi noted that the GPS with Google maps did not work:
Very disappointed that the one most important feature with this app (GPS with Google map) doesn’t work in China. Please switch to other map. Google map is the only map that is blocked in China that I know of. Otherwise more thief will start stealing this scooter knowing that the GPS map doesn’t work.
Financials
Current NIU sales are worth $300 million. The company believes that it could generate as much as $1 billion in two years. As said, the market capitalization is larger than $2 billion, which is significant for a business with less than 600 employees. It means that some investors do believe that the company will be able to generate that amount of sales. Besides, the market believes that NIO will be able to hire and train a significant amount of employees in an extremely short period of time. At the end of the day, with less than 600 employees, you can't generate sales of $1 billion. With these figures, it makes a lot of sense that many investors doubt that the company can be worth $2 billion. Yes, there are many pessimistic investors out there. However, many times they are correct.
Conclusion
Short sellers are taking large positions at NIU because of several reasons. In my view, feedback received from customers does not help the company. You cannot really expect making $1 million in sales when your clients are reporting many bugs. Besides, the company does not seem to be investing a significant amount of money in research and development. You can't have new revolutionary technology if you don't invest in R&D. As a result, I would not expect sales growth to be massive in the future. To sum up, in my view, many things need to change inside NIU before shorts close their positions.
Disclaimer: I don't hold shares of NIO, TSLA, or NIU. But, I may start a short position in NIU soon.
NIU: Shorts Are Everywhere by Stock Market Revolution
Shorts Target Electric Vehicle Stock NIO
It is not a secret that in the last a few months, NIO's short interest increased a lot. Most traders will be wondering why a growth stock like NIO receives that amount of attention from short sellers. I do believe that Citron's comment on the stock explains the current amount of short interest. However, that's not all. I carefully studied the company's estimates and financials. In my opinion, the risks noted by Citron are no more than market rumours.
Total Amount Of Assets, Cash And Total Market Capitalization
In the last annual report, NIO reported cash in hand of $2.8 billion and total assets of $5 billion. The current amount of property, plant and equipment is equal to $0.75 billion. These assets are quite small as compared to the total market capitalization of $65-$71 billion. Most analysts may claim that the company expects to report a significant amount of sales and cash flow in the future. That's correct. However, nobody seems to understand that NIO will need to raise capital. The company will soon need additional cash to finance its new factories. Remember, if NIO has to sell additional shares, the share count will increase, which will lead to stock dilution. As a result, I would expect the share price to decrease.
The Market Expects A Lot From NIO
At the end of the year, NIO expects to produce 48k-50k. The company sells most of its cars at $50k-$60k. It means that the company will be making close to $2.6 billion in sales by the end of the year. With a market capitalization of $65-$71 billion, the market is expecting the company to deliver many more cars in the future. We are talking about a Market Cap/Sales ratio of more than 25x, which is extremely high. I admire the confidence given by market analysts. However, there are many things that may go wrong. If you really want to buy shares at the current price, first read the following risks disclosed by the company:
We have limited experience to date in high volume manufacturing of our electric vehicles. We cannot assure you that we will be able to develop efficient, automated, cost-efficient manufacturing capability and processes, and reliable sources of component supply that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes required to successfully mass market the ES8, the ES6, the EC6 and future vehicles.
Chinese Accounting: Kandi (KNDI) and Luckin Coffee Inc. (LKNCY)
Many companies from China were accused of fraud from 2014 to 2016. As a result, many investors are currently reluctant to buy shares of the companies from China. That's not all. Very recently, other companies like KNDI or LKNCY were accused by short sellers. Their share price suffered massive declines:
Kandi: How This China-Based NASDAQ-Listed Company Used Fake Sales, EV Hype to Nab $160 Million From U.S. Investors Source: Hindenburg Research
Muddy Waters published an anonymous short report on Luckin Coffee, leading to major sell-off on the stock. Source: SA
NIO is more serious than KNDI and LKNCY. However, if investors start to be afraid of the accounting standards in China, NIO’s share price may decline too. It is sad that a few companies have destroyed the reputation of China.
If You Are A Shareholder Of NIO, The Government Of China Is Your Partner.
There is another clear risk about NIO that shareholders need to know. The Government of China finances the company's operations. There are clear risks when you have to deal with politicians and governments. Most investors would be afraid of China not financing NIO's operations any more. As a result, I would expect the share price to decline. But, that's not all. According to documents provided by NIO, if the state of China incurs in operating losses, the company will have to pay some money. I don't think most NIO shareholders know this:
We have entered into an arrangement with Jianghuai Automobile Group Co., Ltd., or JAC, for manufacturing the ES8 for five years starting from 2018.
JAC is a major state-owned automobile manufacturer in China and it constructed such Hefei manufacturing plant for the production of the ES8 (with a modified production line for the ES6) and potentially other future vehicles with us. Pursuant to our arrangement with JAC with respect to the ES8, ES6 and EC6, we pay JAC for each vehicle produced on a per-vehicle basis monthly for the first three years.
In addition, for the first 36 months after the start of production, which commenced on April 10, 2018, to the extent the Hefei manufacturing plant incurs any operating losses, we have agreed to compensate JAC for such operating losses.
My Take
I still remember the time when we could buy NIO’s shares at $17. NIO represented a fantastic opportunity for investors in the United States. Right now, the share price is at more than $45, and many short sellers are targeting both NIO and other stocks from China. In my opinion, there are clear risks for shareholders. Notice that the amount of cash and assets appear to be very small as compared to the total market capitalization. In addition, the state of China is actually your partner if you are a NIO’s shareholder. Most investors will not be interested to be engaged in businesses with governments like China. To sum up, I like the business model of NIO, but I also see a significant number of risks. Be careful!
Disclosure: We Don't Hold NIO, TSLA, KNDI or LKNCY shares
Stock Market Revolution
yep
Shorts Target Electric Vehicle Stock NIO
http://stockmarketrevolution.com/archives/15065
Tips For Investing in Electric Vehicle Stocks
http://stockmarketrevolution.com/archives/15044
Article: Tips For Investing in Electric Vehicle Stocks
http://stockmarketrevolution.com/archives/15044
Coverage - New Article IDEX Share Price Goes Wild
With more than 100% stock returns recently delivered, Ideanomics, Inc. (IDEX) appears to be receiving a lot of attention from investors. The team at Stockmarketrevolution.com studied the company’s business divisions and potential business growth.
http://stockmarketrevolution.com/archives/15049
Guys, NIO is about to ge delisted. Sell your shares.
Follow this guy! he knows what he is talking about.
Forward looking ... hahahaha that's the only thing you have?
Don't you want to talk about future sales or soemething?
The company does not expect sales to justify the current valuation.
5 Reasons To Short NIO
https://investorshub.advfn.com/secure/post_new.aspx?board_id=36185
The increase in short positions in NIO (NIO), the manufacturer of electric vehicles, is impressive. Many short sellers believe that they will be making tons of dollars when the share price collapses in the following months. I don’t know whether that will happen soon or later. However, I do believe that there is a significant number of reasons to justify a short position in NIO. In this article, I have found five reasons, but I believe that there may exist many others.
Number 1: Lack Of Profits
NIO has never been profitable. While the company reports sales growth, net income has been always negative. As a result, I would not expect that value investors will be investing a single dollar in the company. Short sellers know well about the company’s lack of profits. It explains why so many shorts decided to take a position in the company:
We have only recently started to generate revenues and have not been profitable since our inception. We incurred net losses of RMB5,021.2 million, RMB9,639.0 million, RMB11,295.7 million and RMB2,868.5 million (US$406.0 million) in 2017, 2018, 2019 and the six months ended June 30, 2020, respectively. In addition, we had negative cash flows from operating activities of RMB4,574.7 million, RMB7,911.8 million, RMB8,721.7 million and RMB523.1 million (US$74.0 million) in 2017, 2018, 2019 and the six months ended June 30, 2020, respectively.
Number 2: Lack Of Expertise
NIO has limited experience in high volume manufacturing. Most analysts out there have developed sophisticated mathematical models to justify the current valuation of NIO. They believe that manufacturing 10,000 cars is not as complicated as manufacturing one million. I don’t believe that they really thought about it. NIO does not currently have the due know-how to efficiently manufacture a large amount of cars. Of course, the company will acquire that know-how in the future. However, it will take time, and most importantly, it will take a lot of the shareholders’ money. If you are clever, you will wait a few years before buying shares. Let’s see whether the company manages to compete with BMW, Mercedes, and all the other old brands. Notice that they have manufactured brands for the last 100 years. You don’t get that kind of expertise in one day.
We have limited experience to date in high volume manufacturing of our electric vehicles. We cannot assure you that we will be able to develop efficient, automated, cost-efficient manufacturing capability and processes, and reliable sources of component supply that will enable us to meet the quality, price, engineering, design and production standards, as well as the production volumes required to successfully mass market the ES8, the ES6, the EC6 and future vehicles.
Number 3: Lack Of Infrastructure In China
There is another clear risk that nobody is talking about. NIO customers require a network to travel. You need to have charging stations all over the country to drive an electric car. As NIO noted in its annual report, China does not have a public charging network in place. As a result, many drivers will think twice before buying a NIO or any other electric car. Don’t be naive, the lack of infrastructure will diminish the company’s sales growth.
In addition, although the Chinese government has supported the roll-out of a public charging network, the current number of charging infrastructures is generally considered to be insufficient.
Why Are Shorts Taking Positions?
NIU (NIU) is a manufacturer of smart e-scooters from China. Investors should distinguish the company’s name from that of NIO (NIO), the chinese manufacturer of cars. Interestingly, NIU took a name, which is very close to that of a leading company in China.
NIU presents its business model with the following words:
We currently design, manufacture and sell high-performance electric bicycles and motorcycles. We have a streamlined product portfolio consisting of seven series, consisting of four e-scooter series, which are our key products and contributed to the majority of our sales, two urban commuter electric motorcycles, and one performance bicycle series. We have adopted an omnichannel retail model, integrating the offline and online channels, to sell our products and provide services.
The company sells e-scooters and a mobile app. The manufacturer has not designed anything extremely new. In the nine months ended September 2020, the company’s R&D expenses were equal to RMB48 million. Hence, the amount of R&D expenses is very limited, representing only 3% of the total amount of sales in the cited period. If you invest that amount of dollars, you cannot really create new technology. Without new technology, most investors will not really expect a significant amount of future sales. It really explains why short sellers are taking large positions in NIU.
That’s not all. The company does not seem to be receiving good feedback from clients. I checked the feedback given by NIU clients on the Apple store website. Many customers mentioned that the app often loses connection with the e-scooter. They have reported many other bugs. NIU is a young start-up, so I understand that the app may have certain bugs. With that, I don’t see why the company is trading with a market capitalization of more than $2 billion in New York. Companies with such large valuation are massive businesses. If they are software companies, their apps are usually bug free.
Read some of the issues reported in the lines below. This client noted that the battery level reported by the app was not correct:
Excitedly bought a brand new NIU 2 weeks ago and the battery is a dud! All of a sudden just wouldn’t work. NIU won’t immediately replace it even though I just purchased the bike 2 weeks ago. They have to diagnose it first to see if they can fix it before they decide whether or not to give me a new battery. I don’t want a repaired battery on a brand new bike! NIU company should show good customer service and immediately replace it with a new battery. Such a disappointment from a supposed high end company! What’s more stupid is that the APP says my battery is at a 98pt level. Ummm, wrong! Totally inaccurate!
In 2018, another client called Mikedaddi noted that the GPS with Google maps did not work:
Very disappointed that the one most important feature with this app (GPS with Google map) doesn’t work in China. Please switch to other map. Google map is the only map that is blocked in China that I know of. Otherwise more thief will start stealing this scooter knowing that the GPS map doesn’t work.
Financials
Current NIU sales are worth $300 million. The company believes that it could generate as much as $1 billion in two years. As said, the market capitalization is larger than $2 billion, which is significant for a business with less than 600 employees. It means that some investors do believe that the company will be able to generate that amount of sales. Besides, the market believes that NIO will be able to hire and train a significant amount of employees in an extremely short period of time. At the end of the day, with less than 600 employees, you can’t generate sales of $1 billion. With these figures, it makes a lot of sense that many investors doubt that the company can be worth $2 billion. Yes, there are many pessimistic investors out there. However, many times they are correct.
Conclusion
Short sellers are taking large positions at NIU because of several reasons. In my view, feedback received from customers does not help the company. You cannot really expect making $1 million in sales when your clients are reporting many bugs. Besides, the company does not seem to be investing a significant amount of money in research and development. You can’t have new revolutionary technology if you don’t invest in R&D. As a result, I would not expect sales growth to be massive in the future. To sum up, in my view, many things need to change inside NIU before shorts close their positions.
Disclaimer: I don’t hold shares of NIO, TSLA, or NIU. But, I may start a short position in NIU soon.
NIU: Shorts Are Everywhere
http://stockmarketrevolution.com/archives/15033
Don't buy what Goldman tells you to buy hahaha, these bankers haha
Goldman Sachs bankers are using flying drones to help clinch billion-dollar M&A deals
https://www.cnbc.com/2020/11/25/coronavirus-goldman-sachs-bankers-using-flying-drones-on-ma-deals.html?source=content_type%3Areact%7Cfirst_level_url%3Anews%7Csection%3Amain_content%7Cbutton%3Abody_link
I would sell the stock.
New Seeking Alpha Article
SOME SHORTS DID NOT CLOSE HAHA !
https://seekingalpha.com/article/4384830-scholar-rock-is-phase-2-1-billion-is-too-expensive
$ACB looks like a new winner. For the next two weeks, it may go up !
Did you see the transaction today!!!??
Crazy !! I bought many more shares, this is going to be big !
From Twitter... does it make any sense ?
China deals. $aihs acquired its automobile business model for $6 million. Now, we can sell shares with a valuation of $60 million. Thank you America
Are we stupid ? Is the share price worth $1.4?
Do we pay China 10x times the value they paid for the automobile business ?
Did you see the technology !!?? $OPPT come on!
Yeah, it is crazy, stock demand will most likely lead to share price increases... Many traders are following the money flow!
I would expect the company to hit $4 !!! MASSIVE STOCK VOLUME = STOCK DEMAND
10000 more here
I got in, this company is a money maker.
10000 more yeeeeeesssssssss
Looks like a buy! I don't give a damn about Seeking Alpha