Nio Inc (NIO)

[JohnQQ]

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.