Nevertheless, we believe the reward/risk profile still points to the upside from these levels. Provide specific products and services to you, such as portfolio management or data aggregation. The stock of a leading electric vehicle manufacturer in China looks undervalued, says Morningstar’s analyst. Fair value estimate cut to $25.50 on rising expenses, but we maintain our positive view on the company.
And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data. The average emerging-markets fund has a big stake in Chinese stocks and took a hit in the third quarter. While we hold stocks for the long-term, we also use appropriate opportunities to benefit from short- to medium-term swings, leveraging long or short set-ups.
It could also help alleviate significant production challenges moving ahead due to unforeseen COVID lockdowns. Hence, investors willing to bet on further progress should find NIO’s valuation appealing at the current levels, given its high-growth algorithm. Also, it doesn’t expect to face significant demand challenges despite Tesla’s price cuts in China. However, we believe it’s still too early to determine the impact of the heightened competition between NIO and its EV peers.
Is It Really a Bear Market for China Stocks?
Given that NIO had announced 10.06K deliveries for October, its guidance suggests an average of 17.7K each for November and December. Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. As such, the company’s TTM deliveries are expected to reach nearly 128K by December 2022. Therefore, it demonstrates that NIO has been ramping up its production well despite the zero COVID disruptions.
Hence, we are pleased to know that China has decided to refine its zero COVID policy. While the government has emphasized that it doesn’t indicate an exit from zero COVID, we believe it implies positive progress in the correct direction for NIO. Hence, we postulate that the NIO’s momentum in China remains critical for the market to determine its directional bias moving ahead, despite its battering. stan weinstein net worth Accordingly, NIO has significantly outperformed the S&P since our previous update, as it posted a gain of 20.4% (vs. SPX’s 3.7% gain). Coupled with China’s «refinement» of its zero COVID policies last week, we believe the prognosis for Chinese equities is looking increasingly positive. After another selloff in stocks and bonds, the Fed meeting could set the tone for the rest of this year.
Obviously, NIO’s primary strategy is still to target the premium ICE segment in China. Even though the company has made progress as it attempts to diversify into front end or back end salary Europe, the opportunity is still too nascent to assess its likely impact. Management highlighted that it expected to post Q4 deliveries of 45.5K units .
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Bedrijfsgegevens van NIO
Founded in November 2014, Nio designs, develops, jointly manufactures, and sells premium smart electric vehicles. The company differentiates itself through continuous technological breakthroughs and innovations such as battery swapping and autonomous driving technologies. Nio launched the first model, its what is swap in forex ES8 seven-seater electric SUV in December 2017, and began deliveries in June 2018. It sold over 91,000 EVs in 2021, accounting for about 2.7% of the China passenger new energy vehicle market. We sell different types of products and services to both investment professionals and individual investors.
I’m JR, the lead writer and founder of JR Research and Ultimate Growth Investing Marketplace service. Our team is committed to bringing more clarity to investors in their investment decisions. Coupled with a battered valuation with an FY24 Revenue multiple of 0.89x, we see significant re-rating potential from these levels. However, the recovery from its October lows could see NIO retake its long-term support, which is highly constructive. China’s NEV market has largely defied China’s economic malaise and its zero COVID restrictions in 2022.
Explore all the NIO models
Furthermore, the company highlighted its 600K capacity to meet its production requirements if necessary. Accordingly, NIO could post deliveries growth of 63% YoY in November, or 76% MoM. Notwithstanding, its Q4 guidance came in well below the previous consensus estimates of 55.61K units.
- It could also help alleviate significant production challenges moving ahead due to unforeseen COVID lockdowns.
- The average emerging-markets fund has a big stake in Chinese stocks and took a hit in the third quarter.
- Hence, we are pleased to know that China has decided to refine its zero COVID policy.
- Also, it doesn’t expect to face significant demand challenges despite Tesla’s price cuts in China.
Despite that, the opportunity for a mean-reversion rally against its bearish bias still looks attractive. We argued that the market has likely used the panic selling to force weak holders to capitulate, including investors who added at its March/May lows. We discuss why significant pessimism has been baked into its valuation, despite the post-earnings recovery.
Accordingly, recent data showed that China’s October NEV sales increased by 75% YoY. As such, China Passenger Car Association revised its forecasts for China NEV sales to 6.5M by the end of 2022 . Furthermore, our analysis suggests that NIO’s operating performance should continue to improve through FY23 as it ramps up its production with its new product launches.
Nio Stock: A Cheap Alternative to Tesla?
I/we have a beneficial long position in the shares of NIO either through stock ownership, options, or other derivatives. Coupled with the recent refinement of China’s zero COVID policy, we are confident of further progress moving ahead. We’d like to share more about how we work and what drives our day-to-day business. The unusual structure of the Chinese market means the answer depends on where you’re investing.
I have no business relationship with any company whose stock is mentioned in this article. Furthermore, NIO was battered to levels that looked incredibly cheap before it released its Q3’22 earnings. As such, we postulated significant pessimism had already been baked into its valuation. Yet, NIO held its October lows robustly, as we postulated in our previous update. Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams.