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- ZilingZiling
  ·2021-06-28
  Waiting for the right time
  Tesla: Recent Weakness Is An Opportunity
  Summary Tesla has been declining during the recent months, creating opportunities for patient inves
  Tesla: Recent Weakness Is An Opportunity
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- ZilingZiling
  ·2021-06-06
  [Call]
  Can NIO Stock Reach $100? We Think It's A Matter Of 'When' Not 'If'
  NIO's share price has soared by more than 816% in the past year, peaking at almost $62 in early February before the growth stock sell-off in early March.We believe NIO's share price will soar beyond $160 by 2025 as global EV sales continue to ramp up with autonomous driving becoming a reality.NIO has continuously exhibited characteristics of an unsettling innovator. The brand is widely known for their breakthrough in battery swapping technology, “Power Swap”, which provides NIO owners with a fas
  Can NIO Stock Reach $100? We Think It's A Matter Of 'When' Not 'If'
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- ZilingZiling
  ·2021-06-06
  [Strong]
  非常抱歉，此主贴已删除
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for the right time","listText":"Waiting for the right time","text":"Waiting for the right time","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":2,"repostSize":0,"link":"https://laohu8.com/post/127468120","repostId":"1163132894","repostType":4,"repost":{"id":"1163132894","kind":"news","pubTimestamp":1624863227,"share":"https://www.laohu8.com/m/news/1163132894?lang=&edition=full","pubTime":"2021-06-28 14:53","market":"us","language":"en","title":"Tesla: Recent Weakness Is An Opportunity","url":"https://stock-news.laohu8.com/highlight/detail?id=1163132894","media":"seekingalpha","summary":"Summary\n\nTesla has been declining during the recent months, creating opportunities for patient inves","content":"<p><b>Summary</b></p>\n<ul>\n <li>Tesla has been declining during the recent months, creating opportunities for patient investors.</li>\n <li>Rising competition and profit concerns are not a problem for Tesla due to its key advantages.</li>\n <li>Tesla's unique ecosystem and the size of the market will allow Tesla to continue its growth despite rising competition.</li>\n <li>Although risks remain, I believe that Tesla is a long-term buy because the company is still in its growth phases.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/707bb99dcaa93d75f576a78ef1ecd11c\" tg-width=\"768\" tg-height=\"512\" referrerpolicy=\"no-referrer\"><span>jetcityimage/iStock Editorial via Getty Images</span></p>\n<p><b>Introduction</b></p>\n<p>Over the past few months, Tesla stock has been struggling to move upwards. This could be seen as normal since the stock saw a massive bull run in 2020 and some noticeable risks started arising. One of these risks was inflationary pressure leading to investors speculating that the FED will taper and raise rates earlier than expected. This fear caused the overall tech and growth sector to decline. However, the inflationary fears dragging the tech and growth sector have been weakening over the past few months. Although the actual inflation seen in the CPI data worsened year-over-year, investors are reacting less negatively to the news, lessening the pressure on overall tech and growth stocks. Also, the 10-year treasury yield is declining finally setting up a potential for a rotation back into tech and growth. Thus, as the overall market is turning favorable for tech and growth stocks, I would like to discuss one of the most famous growth stocks, Tesla (NASDAQ:TSLA).</p>\n<p><b>Investment Thesis</b></p>\n<p>Tesla recently has been under attack as investors started questioning valuations and competitive risks. Some bearish arguments pointed out that the competition was intensifying in the BEV (battery electric vehicle) industry, and that Tesla is still unprofitable without selling Bitcoin (BTC-USD) and carbon emissions credit. While I agree that these risks are legitimate and should be considered, I believe that these risks are insignificant to Tesla’s future opportunities. In fact, I think this short-term turmoil is only causing buying opportunities. Here’s why:</p>\n<ol>\n <li><p>Tesla is creating its own ecosystem that no other automakers can replicate.</p></li>\n <li><p>In the age where data is the new oil, Tesla is the only automaker utilizing the valuable data.</p></li>\n</ol>\n<p><b>Bears Say: Tesla Is Still Unprofitable</b></p>\n<p>By now, it is well known that Tesla’s profitability does not come from selling cars. Tesla, despite improvements over the years, still relies heavily on regulatory credits to generate income. I believe that this does not pose any problem. Tesla simply does not need to make money today; this may continue to be a threat in the short term, but I think the current profitability structure is fine from a long-term investor perspective. Tesla has been treading along the profitability breakeven point; I think Tesla is leveraging its ability to generate cash from selling regulatory credits to invest back into its growth. The BEV market is just getting started and as bears have pointed out, the competition is starting to roll in; thus, there is no reason for Tesla to sacrifice growth for profits today.</p>\n<p>An example of Tesla focusing on growth instead of profits is Tesla’s commitment to making a&nbsp;25,000$ vehicle.This cheap vehicle will not be good for Tesla’s margins or net income; however, the vehicle will further strengthen Tesla’s ecosystem, which will be discussed later, and expand the overall BEV market. As the overall BEV market expands, the volume will soon follow, allowing Tesla to be more efficient with scale as the most expensive component in the vehicle, lithium-ion battery price decreases over time. Tesla’s strategy has been clear since the beginning: focus on growth. Nothing has changed but investors' expectations; profits will naturally follow as the market matures. Now is simply not the time to focus on profits.</p>\n<p>Bloomberg: Quoting GM CEO Mary</p>\n<blockquote>\n EV margins will match what they are today for combustion-engine cars by the “mid or later part of the decade.”\n</blockquote>\n<p>Furthermore, as the quote shows, EV profitability is not only Tesla’s problem. No automaker is making significant positive net income selling BEV vehicles today. Thus, Tesla's focus on growth and the economies of scale should not be criticized.</p>\n<p><img src=\"https://static.tigerbbs.com/27aa28f3efd41460dca185274ea936eb\" tg-width=\"580\" tg-height=\"499\" referrerpolicy=\"no-referrer\"></p>\n<p>As the picture above shows, Lithium-ion battery pack costs are continuing to decrease significantly, and as this trend accelerates, Tesla’s margin will naturally go up. Thus, Tesla’s best interest is still in growth and expansion rather than achieving limited profitability today.</p>\n<p><b>Unique Ecosystem</b></p>\n<p>Moving on to my bullish argument, Tesla has a unique ecosystem that can not be replicated by any other legacy automobile manufacturers. To know the importance of an ecosystem, we need to look at Apple(NASDAQ:AAPL). What makes Apple so different? Samsung (OTC:SSNLF)&nbsp;sells more phones than Apple, yet Apple makes more money, by far. Furthermore, iPhone does not have the highest specs. iPhones do not have the best camera (in terms of megapixels), biggest RAM, biggest storage, or best screen refresh rate. Then, why is Apple making so much money and why can't other manufacturers with similar technology replicate Apple’s success? The answer to this question, in my opinion, is that Apple has an ecosystem that can not be replicated by Samsung or any other phone maker. Consumers love Apple’s ecosystem that offers every service in a simple, immersive, and frictionless manner. Once a consumer enters this ecosystem, it is almost impossible to leave. Apple makes its own chips, operating system, music services, tablets, laptops, app stores, and many more services locking in loyal customers and selling products at higher margins. Then, what is Tesla’s ecosystem? It is still in the early stages, but Tesla is the only automaker that operates its own charging station allowing consumers to experience the frictionless ecosystem or connectivity. Tesla cars preheat the battery and get the battery ready for supercharging while the car locates the chargers and leads the driver to the superchargers. The ecosystem does not stop here, Tesla, like Apple, designs its own chips, own operating system, and autonomous driving technology, which creates an immersive and frictionless ecosystem like Apple. The software and charging experience is unmatched, and it is only getting better with the eventual rise of autonomous technology and rumored&nbsp;Tesla restaurants.</p>\n<p>This ecosystem will not only make Tesla unique, but it will also prevent consumers from moving over to its competitors because for consumers, it's all about modernized simplistic design with a frictionless experience that feels luxurious. I can't imagine any other automaker that can replicate Tesla’s brand and ecosystem. No automaker today is even close to providing its own superchargers, autonomous driving technologies, and unique software. Plus, no legacy automakers are or can sell FSD software for additional ten thousand dollars. The brand power, in my opinion, is strong enough to minimize the threat from the competition.</p>\n<p>Thus, I believe investors do not need to worry too much about net income as long as the operational efficiencies do not get significantly worse. Tesla, in my opinion, is creating an ecosystem that will generate significant profitability through higher margins and more loyal customers in the future. Tesla is simply in its growth phases.</p>\n<p><b>Rising Competition</b></p>\n<p>Rising competition is a serious threat despite Tesla's unique ecosystem. I think it is true that the legacy automakers are posing some risks to Tesla; however, I believe that the risk is not great enough to hinder Tesla’s growth. I do agree that more prominent competitors like Volkswagen (OTCPK:VWAGY) do pose an immense threat, but I do not see this as the end of Tesla. In fact, I think both companies will thrive at the end of the day.</p>\n<p>I will not go into details on why I believe that both Volkswagen and Tesla will succeed in the BEV market today because I will be focusing on why I think Tesla’s growth will not be affected by Volkswagen.</p>\n<p>First,the sheer size of the electric vehicle market&nbsp;is big enough to support multiple major players. In the age of ICE vehicles, Volkswagen was not the only major company. Similarly, I believe that the size of the EV market will support both Tesla, Volkswagen, and a few more companies. By 2025, the EV sales in the U.S. alone are expected to reach 6.9 million, far above 500,000 Tesla vehicle sales in 2020.</p>\n<p>Second, I believe Tesla has unique advantages like selling its FSD software for 10,000 dollars. We all know that selling EVs is not profitable yet, which makes Tesla selling its software extremely important. The Tesla brand is strong enough to sell an FSD software for 10,000 dollars. I believe that this advantage can not easily be implemented by other companies because it is the result of brand power and loyalty that comes from its ecosystem. By selling its software, Tesla can decrease the price of its vehicles, like in Japan and South Korea, while maintaining some levels of margin for growth Detering some threats from the competition.</p>\n<p><b>Data Advantage</b></p>\n<p>Data, without any doubt, is becoming the new oil, getting more valuable by the seconds. The company that can correctly control and utilize data will be the winner going forward, and the very company utilizing massive amounts of user data is Tesla. Unlike any other autonomous driving technology developers, users pay Tesla to provide the company with the necessary data to improve the autonomous driving system. Google’s (NASDAQ:GOOG) Waymo uses specialized cars in heavily mapped areas to operate regional taxi networks, which costs money. However, Tesla’s customer, upon purchasing the vehicle, provides Tesla with valuable data for the company to process turning it into an autonomous vehicle technology. Also, the volume of the data Tesla can collect from its customers is simply unmatched. I think the advantage over the long term is obvious because the amount of data Tesla accumulates and utilizes will continue to far outpace any of its competitors potentially allowing Tesla to become one of the first companies to fully launch level 4 or above FSD.</p>\n<p><b>Risk</b></p>\n<p>I think the most obvious risk to my investment thesis is bias. Although I do not own any Tesla shares today, I have a very positive view of this company and plan to purchase shares in the coming weeks as I reallocate a portion of my portfolio to growth and tech stocks; thus, I may have introduced significant bias in my article by downplaying the competitive risk that Tesla faces. Also, because of my bias, I may have overstated the brand power that Tesla has.</p>\n<p>Other than my bias, I believe political risk concerning China is one of Tesla's greatest threats. Political tensions between the countries led by the United States and China, are growing. During the past weekend,the G7 meeting further solidified this tension&nbsp;as the group of 7 nations targeted China’s human rights and coronavirus problems. The politics may change consumer sentiment in China or lead to Chinese government risk. For example, the&nbsp;Chinese government accused Tesla of spying on China using its cameras.It is clear that tensions are worsening and geopolitical threats will not be easing any time soon causing immense risk to Tesla.</p>\n<p><b>Valuation and Financials</b></p>\n<p>Multiple bearish arguments target that Tesla has an extremely high valuation at about 130 times the forward price to earnings. I believe that one must pay high prices for high-growth companies. Tesla is expected to grow its delivery volume by about 50% in 2021. I believe that his goal is achievable because Tesla is still selling less than 1 million vehicles a year, which is very small compared to competitors in the automobile industry. Also, the completion of Gigafactory Berlin and Austin later this year will contribute to the growth forecast. Finally, investors must take into account that Tesla is in its growth phases not growing profitability. As building EVs becomes profitable and Tesla enjoys the extra margin from its FSD software sale, profits have the potential to exponentially rise. Thus, I believe that the current argument on high valuation is not a huge concern. Investors need to look at Tesla as a high-growth company in its early stages.</p>\n<p>Tesla's financials&nbsp;are fairly good suggesting that risks regarding financial health are limited. The company had about 17 billion dollars in cash and equivalents, which accounted for about 2.8% of the market cap. Tesla had a total asset of about 53 billion dollars and a total liability of about 28.5 billion dollars equating to a shareholder equity value of about 23 billion dollars and a liability to asset ratio (L/A) of about 53.7. The overall balance sheet poses no threat, and the immense cash pile is enough to support Tesla's growth; thus, I believe that Tesla's financials do not pose any threat to the company's future.</p>\n<p><b>Summary</b></p>\n<p>I believe that recent consolidation and weakness in Tesla is creating opportunities for long-term investors. Tesla is indeed unprofitable without regulatory credits and that competition is starting to heat up in the market. However, because Tesla is and was a growth company from the beginning, I believe that the profit levels today are acceptable. The company is simply choosing future growth over today's profits. Also, along with an EV market that can support multiple players, Tesla's unique ecosystem, brand loyalty, and data utilization will shield the company from experience any slow down. Rising competition is natural and should not be feared. Finally, the valuation and risk regarding China may be a concern; however, I believe, for reasons that I have discussed, Tesla is a buy today.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Tesla: Recent Weakness Is An Opportunity</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nTesla: Recent Weakness Is An Opportunity\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-28 14:53 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4436805-tesla-recent-weakness-is-an-opportunity><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nTesla has been declining during the recent months, creating opportunities for patient investors.\nRising competition and profit concerns are not a problem for Tesla due to its key advantages.\n...</p>\n\n<a href=\"https://seekingalpha.com/article/4436805-tesla-recent-weakness-is-an-opportunity\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4436805-tesla-recent-weakness-is-an-opportunity","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1163132894","content_text":"Summary\n\nTesla has been declining during the recent months, creating opportunities for patient investors.\nRising competition and profit concerns are not a problem for Tesla due to its key advantages.\nTesla's unique ecosystem and the size of the market will allow Tesla to continue its growth despite rising competition.\nAlthough risks remain, I believe that Tesla is a long-term buy because the company is still in its growth phases.\n\njetcityimage/iStock Editorial via Getty Images\nIntroduction\nOver the past few months, Tesla stock has been struggling to move upwards. This could be seen as normal since the stock saw a massive bull run in 2020 and some noticeable risks started arising. One of these risks was inflationary pressure leading to investors speculating that the FED will taper and raise rates earlier than expected. This fear caused the overall tech and growth sector to decline. However, the inflationary fears dragging the tech and growth sector have been weakening over the past few months. Although the actual inflation seen in the CPI data worsened year-over-year, investors are reacting less negatively to the news, lessening the pressure on overall tech and growth stocks. Also, the 10-year treasury yield is declining finally setting up a potential for a rotation back into tech and growth. Thus, as the overall market is turning favorable for tech and growth stocks, I would like to discuss one of the most famous growth stocks, Tesla (NASDAQ:TSLA).\nInvestment Thesis\nTesla recently has been under attack as investors started questioning valuations and competitive risks. Some bearish arguments pointed out that the competition was intensifying in the BEV (battery electric vehicle) industry, and that Tesla is still unprofitable without selling Bitcoin (BTC-USD) and carbon emissions credit. While I agree that these risks are legitimate and should be considered, I believe that these risks are insignificant to Tesla’s future opportunities. In fact, I think this short-term turmoil is only causing buying opportunities. Here’s why:\n\nTesla is creating its own ecosystem that no other automakers can replicate.\nIn the age where data is the new oil, Tesla is the only automaker utilizing the valuable data.\n\nBears Say: Tesla Is Still Unprofitable\nBy now, it is well known that Tesla’s profitability does not come from selling cars. Tesla, despite improvements over the years, still relies heavily on regulatory credits to generate income. I believe that this does not pose any problem. Tesla simply does not need to make money today; this may continue to be a threat in the short term, but I think the current profitability structure is fine from a long-term investor perspective. Tesla has been treading along the profitability breakeven point; I think Tesla is leveraging its ability to generate cash from selling regulatory credits to invest back into its growth. The BEV market is just getting started and as bears have pointed out, the competition is starting to roll in; thus, there is no reason for Tesla to sacrifice growth for profits today.\nAn example of Tesla focusing on growth instead of profits is Tesla’s commitment to making a 25,000$ vehicle.This cheap vehicle will not be good for Tesla’s margins or net income; however, the vehicle will further strengthen Tesla’s ecosystem, which will be discussed later, and expand the overall BEV market. As the overall BEV market expands, the volume will soon follow, allowing Tesla to be more efficient with scale as the most expensive component in the vehicle, lithium-ion battery price decreases over time. Tesla’s strategy has been clear since the beginning: focus on growth. Nothing has changed but investors' expectations; profits will naturally follow as the market matures. Now is simply not the time to focus on profits.\nBloomberg: Quoting GM CEO Mary\n\n EV margins will match what they are today for combustion-engine cars by the “mid or later part of the decade.”\n\nFurthermore, as the quote shows, EV profitability is not only Tesla’s problem. No automaker is making significant positive net income selling BEV vehicles today. Thus, Tesla's focus on growth and the economies of scale should not be criticized.\n\nAs the picture above shows, Lithium-ion battery pack costs are continuing to decrease significantly, and as this trend accelerates, Tesla’s margin will naturally go up. Thus, Tesla’s best interest is still in growth and expansion rather than achieving limited profitability today.\nUnique Ecosystem\nMoving on to my bullish argument, Tesla has a unique ecosystem that can not be replicated by any other legacy automobile manufacturers. To know the importance of an ecosystem, we need to look at Apple(NASDAQ:AAPL). What makes Apple so different? Samsung (OTC:SSNLF) sells more phones than Apple, yet Apple makes more money, by far. Furthermore, iPhone does not have the highest specs. iPhones do not have the best camera (in terms of megapixels), biggest RAM, biggest storage, or best screen refresh rate. Then, why is Apple making so much money and why can't other manufacturers with similar technology replicate Apple’s success? The answer to this question, in my opinion, is that Apple has an ecosystem that can not be replicated by Samsung or any other phone maker. Consumers love Apple’s ecosystem that offers every service in a simple, immersive, and frictionless manner. Once a consumer enters this ecosystem, it is almost impossible to leave. Apple makes its own chips, operating system, music services, tablets, laptops, app stores, and many more services locking in loyal customers and selling products at higher margins. Then, what is Tesla’s ecosystem? It is still in the early stages, but Tesla is the only automaker that operates its own charging station allowing consumers to experience the frictionless ecosystem or connectivity. Tesla cars preheat the battery and get the battery ready for supercharging while the car locates the chargers and leads the driver to the superchargers. The ecosystem does not stop here, Tesla, like Apple, designs its own chips, own operating system, and autonomous driving technology, which creates an immersive and frictionless ecosystem like Apple. The software and charging experience is unmatched, and it is only getting better with the eventual rise of autonomous technology and rumored Tesla restaurants.\nThis ecosystem will not only make Tesla unique, but it will also prevent consumers from moving over to its competitors because for consumers, it's all about modernized simplistic design with a frictionless experience that feels luxurious. I can't imagine any other automaker that can replicate Tesla’s brand and ecosystem. No automaker today is even close to providing its own superchargers, autonomous driving technologies, and unique software. Plus, no legacy automakers are or can sell FSD software for additional ten thousand dollars. The brand power, in my opinion, is strong enough to minimize the threat from the competition.\nThus, I believe investors do not need to worry too much about net income as long as the operational efficiencies do not get significantly worse. Tesla, in my opinion, is creating an ecosystem that will generate significant profitability through higher margins and more loyal customers in the future. Tesla is simply in its growth phases.\nRising Competition\nRising competition is a serious threat despite Tesla's unique ecosystem. I think it is true that the legacy automakers are posing some risks to Tesla; however, I believe that the risk is not great enough to hinder Tesla’s growth. I do agree that more prominent competitors like Volkswagen (OTCPK:VWAGY) do pose an immense threat, but I do not see this as the end of Tesla. In fact, I think both companies will thrive at the end of the day.\nI will not go into details on why I believe that both Volkswagen and Tesla will succeed in the BEV market today because I will be focusing on why I think Tesla’s growth will not be affected by Volkswagen.\nFirst,the sheer size of the electric vehicle market is big enough to support multiple major players. In the age of ICE vehicles, Volkswagen was not the only major company. Similarly, I believe that the size of the EV market will support both Tesla, Volkswagen, and a few more companies. By 2025, the EV sales in the U.S. alone are expected to reach 6.9 million, far above 500,000 Tesla vehicle sales in 2020.\nSecond, I believe Tesla has unique advantages like selling its FSD software for 10,000 dollars. We all know that selling EVs is not profitable yet, which makes Tesla selling its software extremely important. The Tesla brand is strong enough to sell an FSD software for 10,000 dollars. I believe that this advantage can not easily be implemented by other companies because it is the result of brand power and loyalty that comes from its ecosystem. By selling its software, Tesla can decrease the price of its vehicles, like in Japan and South Korea, while maintaining some levels of margin for growth Detering some threats from the competition.\nData Advantage\nData, without any doubt, is becoming the new oil, getting more valuable by the seconds. The company that can correctly control and utilize data will be the winner going forward, and the very company utilizing massive amounts of user data is Tesla. Unlike any other autonomous driving technology developers, users pay Tesla to provide the company with the necessary data to improve the autonomous driving system. Google’s (NASDAQ:GOOG) Waymo uses specialized cars in heavily mapped areas to operate regional taxi networks, which costs money. However, Tesla’s customer, upon purchasing the vehicle, provides Tesla with valuable data for the company to process turning it into an autonomous vehicle technology. Also, the volume of the data Tesla can collect from its customers is simply unmatched. I think the advantage over the long term is obvious because the amount of data Tesla accumulates and utilizes will continue to far outpace any of its competitors potentially allowing Tesla to become one of the first companies to fully launch level 4 or above FSD.\nRisk\nI think the most obvious risk to my investment thesis is bias. Although I do not own any Tesla shares today, I have a very positive view of this company and plan to purchase shares in the coming weeks as I reallocate a portion of my portfolio to growth and tech stocks; thus, I may have introduced significant bias in my article by downplaying the competitive risk that Tesla faces. Also, because of my bias, I may have overstated the brand power that Tesla has.\nOther than my bias, I believe political risk concerning China is one of Tesla's greatest threats. Political tensions between the countries led by the United States and China, are growing. During the past weekend,the G7 meeting further solidified this tension as the group of 7 nations targeted China’s human rights and coronavirus problems. The politics may change consumer sentiment in China or lead to Chinese government risk. For example, the Chinese government accused Tesla of spying on China using its cameras.It is clear that tensions are worsening and geopolitical threats will not be easing any time soon causing immense risk to Tesla.\nValuation and Financials\nMultiple bearish arguments target that Tesla has an extremely high valuation at about 130 times the forward price to earnings. I believe that one must pay high prices for high-growth companies. Tesla is expected to grow its delivery volume by about 50% in 2021. I believe that his goal is achievable because Tesla is still selling less than 1 million vehicles a year, which is very small compared to competitors in the automobile industry. Also, the completion of Gigafactory Berlin and Austin later this year will contribute to the growth forecast. Finally, investors must take into account that Tesla is in its growth phases not growing profitability. As building EVs becomes profitable and Tesla enjoys the extra margin from its FSD software sale, profits have the potential to exponentially rise. Thus, I believe that the current argument on high valuation is not a huge concern. Investors need to look at Tesla as a high-growth company in its early stages.\nTesla's financials are fairly good suggesting that risks regarding financial health are limited. The company had about 17 billion dollars in cash and equivalents, which accounted for about 2.8% of the market cap. Tesla had a total asset of about 53 billion dollars and a total liability of about 28.5 billion dollars equating to a shareholder equity value of about 23 billion dollars and a liability to asset ratio (L/A) of about 53.7. The overall balance sheet poses no threat, and the immense cash pile is enough to support Tesla's growth; thus, I believe that Tesla's financials do not pose any threat to the company's future.\nSummary\nI believe that recent consolidation and weakness in Tesla is creating opportunities for long-term investors. Tesla is indeed unprofitable without regulatory credits and that competition is starting to heat up in the market. However, because Tesla is and was a growth company from the beginning, I believe that the profit levels today are acceptable. The company is simply choosing future growth over today's profits. Also, along with an EV market that can support multiple players, Tesla's unique ecosystem, brand loyalty, and data utilization will shield the company from experience any slow down. Rising competition is natural and should not be feared. Finally, the valuation and risk regarding China may be a concern; however, I believe, for reasons that I have discussed, Tesla is a buy today.","news_type":1},"isVote":1,"tweetType":1,"viewCount":140,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":115910464,"gmtCreate":1622945703258,"gmtModify":1631889692375,"author":{"id":"3572591577571735","authorId":"3572591577571735","name":"Ziling","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3572591577571735","authorIdStr":"3572591577571735"},"themes":[],"htmlText":"[Call]&nbsp;","listText":"[Call]&nbsp;","text":"[Call]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/115910464","repostId":"1148130971","repostType":4,"repost":{"id":"1148130971","kind":"news","pubTimestamp":1622866524,"share":"https://www.laohu8.com/m/news/1148130971?lang=&edition=full","pubTime":"2021-06-05 12:15","market":"us","language":"en","title":"Can NIO Stock Reach $100? We Think It's A Matter Of 'When' Not 'If'","url":"https://stock-news.laohu8.com/highlight/detail?id=1148130971","media":"seekingalpha","summary":"NIO's share price has soared by more than 816% in the past year, peaking at almost $62 in early February before the growth stock sell-off in early March.We believe NIO's share price will soar beyond $160 by 2025 as global EV sales continue to ramp up with autonomous driving becoming a reality.NIO has continuously exhibited characteristics of an unsettling innovator. The brand is widely known for their breakthrough in battery swapping technology, “Power Swap”, which provides NIO owners with a fas","content":"<p><b>Summary</b></p>\n<ul>\n <li>NIO's share price has soared by more than 816% in the past year, peaking at almost $62 in early February before the growth stock sell-off in early March.</li>\n <li>The company's innovative approach and overseas expansion strategy, combined with the growing market sentiment on global electrification and automation are expected to boost the company's valuation.</li>\n <li>We believe NIO's share price will soar beyond $160 by 2025 as global EV sales continue to ramp up with autonomous driving becoming a reality.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/7b31b2f189fa181e941126674e0b4c0b\" tg-width=\"1536\" tg-height=\"1024\"><span>Photo by Drew Angerer/Getty Images News via Getty Images</span></p>\n<p>Despite it being a local Chinese electric vehicle (“EV”) brand that has only recently started its overseas expansion into Europe, NIO(NYSE:NIO)has already garnered significant international attention amidst avid investors within the EV sector in recent years. It has only been three short years since NIO made its first deliveries in mid-2018, yet many are already wondering whether its share price can reach similar heights as an industry leader, Tesla’s(NASDAQ:TSLA). Albeit a little farfetched given Tesla is currently trading at more than $600 per share with a market cap of more than $600 billion, we do believe NIO has promising potential to break $100 per share before 2025. Even Wall Street Analysts remain optimistic about the company’s future by assigning a&nbsp;price target of close to $60, which represents upward potential of more than 35% based on the last traded share price of $42.34 (June 1st).</p>\n<p>Founded in 2014, NIO has sold and delivered more than 100,000 vehicles in China to date. The company boasts a fleet of five emission-free, fully battery-powered models, ranging from sports cars to luxury sedans and full-size SUVs. In addition to their vehicles, NIO is also known for their significant progress achieved in innovative technology, including state-of-the-art battery solutions, artificial intelligence, and autonomous driving. The company has also recently turned their global expansion plans into reality, with the first overseas NIO store to open in Oslo, Norway in Q3 2021. We believe that reaching a share price of $100 is no longer a question of “if”, but instead, “when”.</p>\n<p><b>A Trailblazer in Innovative Technology</b></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/16d9fd877602d5604bc3a69593badfdf\" tg-width=\"640\" tg-height=\"262\"><span>Source:ir.nio.com</span></p>\n<p>NIO has continuously exhibited characteristics of an unsettling innovator. The brand is widely known for their breakthrough in battery swapping technology, “Power Swap”, which provides NIO owners with a fast and convenient solution to concerns over the typically limited travel range of EVs. Similar to a gas station, Power Swap is a battery swapping station that can swap a dead battery out for a fully charged one in under three minutes; a fully charged battery enables a NIO vehicle to travel up to 435 miles, which is more than double of the&nbsp;181-mile average travel range of electric vehicles&nbsp;currently available on the market. NIO owners have the option to subscribe to the“Battery as a Service” (“BaaS”)package, which is a monthly subscription service that provides NIO owners with flexible options for battery upgrades based on personal needs. The company currently offers a standard 75 kWh battery which enables a travel range of up to 310 miles on a full charge, and an enhanced 100 kWh battery which enables a travel range of up to 435 miles on a full charge; both are available for NIO owners to choose from on a month-to-month basis under BaaS. To date, there are&nbsp;more than 226 battery swapping stations&nbsp;across China, with more on the way following a recent&nbsp;strategic partnership agreement&nbsp;between NIO and Sinopec. NIO’s vehicles are also compatible with local competitor XPeng’s(NYSE:XPEV)1,140 vehicle charging stations available across 164 cities in China, which further enhances its existing network of charging infrastructure in place for NIO owners.</p>\n<p>In addition to the developed network of infrastructure needed to sustain NIO EVs in the long run, the company has also been working diligently on perfecting their autonomous driving and AI technology in order to remain competitive in the broader EV and tech space. NIO has already been performing testing on its autonomous driving systems since 2016, with their first testing on public roads in Beijing performed in 2018. The company’s commitment to the future of passenger transportation is also proven through their development of&nbsp;EVE, the brand’s concept car for autonomous driving which encompasses a luxurious, comfortable and safe experience powered by NIO’s&nbsp;NOMI AI, the world’s first in-vehicle artificial intelligence.</p>\n<p>To further enhance their progress in autonomous driving technology, NIO has recently&nbsp;partnered with Mobileye&nbsp;– an Intel-owned(NASDAQ:INTC)company known for developing the “EyeQ chip” currently used by more than 27 car manufacturers for their assisted-driving technologies – to develop and commercialize driving automation that does not require human interaction (i.e. “level 4” autonomous driving). Their collaboration is expected to accelerate NIO’s launch of the “Autonomous Driving as a Service” (“ADaaS”) package, which is a monthly subscription for their autonomous driving technology, “NIO Autonomous Driving” (“NAD”). However, similar to Tesla’s “Full Self-Driving” package, the NAD technology that is expected to launch in 2022 does not yet make NIO vehicles capable of driving without human intervention, but it does catapult NIO to a comparable spot with industry leader Tesla in the race towards level 4 autonomous driving. NIO owners will have the option to subscribe to ADaaS for a monthly subscription fee of RMB 680. With more than 102,000 NIO vehicles on the road today, the new subscription package is expected to generate incremental annual sales of RMB 840 million ($132 million); the additional revenue stream is valued at approximately RMB 10 billion ($1.6 billion) upon the service’s inception, assuming an average vehicle life of 12 years with most existing NIO owners signing up.</p>\n<p>NIO’s continuous developments in autonomous driving technology are expected to benefit the company and its shareholders greatly in the near future. By 2025, the global autonomous cars market will become one of the fastest growing and most highly demanded segments with an&nbsp;estimated value of $1.6 trillion. A 6% share of this market would add a valuation of at least $100 billion to NIO’s existing $67 billion market cap, boosting its per unit share value to more than $100. Considering NIO is currently one of the very few fully electric automakers to have achieved tangible results within the autonomous driving scene, and is actively growing its overseas sales, we are confident that the company is capable of capturing more than 6% of the said market share, and achieve a per unit share price of more than $100 by 2025 with ease. Combined with the global shift in consumer preference towards electrification and automation, we are projecting vehicle sales of approximately 300,000 units by FY 2025, which will yield total revenues of approximately RMB 140 billion ($22 billion).</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b6c800a04e6df92802f6893d214eecdd\" tg-width=\"640\" tg-height=\"213\"><span>Source: Author, with data from our internal forecasts (NIO_-_Forecasted_Financial_Information.pdf).</span></p>\n<p><b>Global Expansion</b></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/537449f8f7ee9c736b48c1776cbb7259\" tg-width=\"640\" tg-height=\"249\"><span>Source: ir.nio.com</span></p>\n<p>Another catalyst that will propel NIO’s share price beyond $100 is their ongoing overseas expansion efforts. NIO has been transparent about their intentions to expand globally, especially in the U.S. and Europe, as part of their plans in becoming an industry leader. NIO will be opening its first&nbsp;overseas sales and service centre in Oslo, Norway&nbsp;in September. The brand’s footprint in Norway will further expand in 2022 with four more NIO stores to open in Bergen, Stavanger, Trondheim and Kristiansand. In addition to its direct sales and service centres, NIO will also be introducing a full charging map for Europe, starting with four NIO Power Swap stations in Norway to provide new NIO owners with the convenience and range that the brand builds its success on. NIO’s flagship SUV, the&nbsp;ES8, which currently retails at a&nbsp;starting price of approximately US$67,000, will be the first model introduced in the European market, with the brand’s newest full-size sedan, the&nbsp;ET7, to follow in 2022.</p>\n<p>With a proven sales track record in China’s luxury EV market, and specs comparable to the globally recognized Tesla, there is no reason for NIO to not succeed overseas. As mentioned in earlier sections, NIO’s vehicles have a driving range of up to 435 miles on a full charge, making it a desirable choice for potential European and American car owners looking for a reliable companion to accompany them on daily commutes to long road trips. The NIO exterior and interior designs are also modern, luxurious, and comparable to those preferred by the European and North American population. Combined with a diverse product line and price range, NIO is equipped to take on the increasing demands for EVs on a global scale.</p>\n<p><b>NIO’s Historical Performance</b></p>\n<p>Just a little more than a year ago, NIO’s share price hit an all-time low at under $2 amidst liquidity troubles despite continued vehicle sales. In mid-2020, the municipal government of Hefei, China came to NIO’s rescue with a&nbsp;capital injection of RMB 7 billion&nbsp;(approximately $1 billion). The arrangement resulted in the creation of “NIO China”, which serves as the operating entity that holds all of NIO’s core businesses and assets; NIO currently holds a 90.36% ownership interest in NIO China, while the “Hefei Strategic Investors” consortium holds the remainder 9.64%. The partnership became the company’s lifeline; the additional capital brought forth significant improvements to the company’s operations and vehicle sales, which were reflected in their strong financial performance and upward trend in share price in the summer of 2020. By the end of 2020’s second quarter, NIO’s share price rebounded by almost 20% on average after posting a 171% quarter-over-quarter increase in total revenues. The company’s share price more than tripled in 2020’s third quarter, averaging $15.40, and continued to climb towards its fourth quarter average of $38.70. By the end of the latest quarter ended March 31st, 2021, NIO’s share price averaged $50.97, and peaked at almost $62 in February which is more than 10x its&nbsp;IPO price in 2018. The company holds a market cap of more than $67 billion today, outgrowing its mere $1 billion market cap when it made its debut on the NYSE.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/75a1d7edb18c1762028ba54f617e1982\" tg-width=\"640\" tg-height=\"250\"><span>Source: Author, with data from ir.nio.com</span></p>\n<p>NIO’s fundamentals have also shown nothing but steady improvements since its share price peaked earlier this year before the&nbsp;growth stock sell-off in late February. Deliveries in 2021 have continued to accelerate exponentially, with first quarter deliveries of more than 20,000 vehicles, representing almost 50% of total deliveries made in 2020. The company continues to exhibit a promising outlook with more than 7,100 vehicles delivered in April, representing an increase of more than 125% year-over-year. NIO has also maintained positive cash flows from operating activities for the first quarter of 2021, thanks to the higher deliveries and effective cost-management measures which have amped up their gross profit margin to 19.5%, comparable with industry leaders like Tesla whose first quarter gross margins were 21%. As aforementioned, we are forecasting vehicle sales of close to 300,000 units by FY 2025, which translates to approximately RMB 140 billion ($22 billion) in total revenues ($18.60 per share). Our vehicle sales forecast for FY 2025 is further corroborated by the&nbsp;recently renewed manufacturing agreement&nbsp;with joint venturer “Jianghuai Automobile Group” (“JAC”), which increases the current annual production capacity of 100,000 units to 240,000 units; the ongoing construction of “NeoPark” in Hefei, China is also expected to add annual production capacity of 1 million units, which further supports our positive outlook on NIO’s continued commitment to grow its business. Considering industry peer Tesla’s current P/S ratio of 16.43x with approximately $42 billion in annual revenues (annualization of $10.389 billion in first quarter revenues), the same proportion applied to NIO’s forecasted FY 2025 total revenues is expected to yield a P/S ratio of 8.7x, resulting in a share price of more than $160.</p>\n<p><b>NIO vs. LI and XPEV</b></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/af8fa939f92be448d1f427a6ac4bfb25\" tg-width=\"640\" tg-height=\"352\"><span>Source: Finviz</span></p>\n<p>We have also compared NIO’s current P/S ratio to its domestic peers to gauge the timeline in which NIO’s share price will exceed $100. NIO currently trades at a P/S ratio of approximately 14.88x, while domestic industry peers, Li Auto(NASDAQ:LI)and XPEV, currently trade at a P/S ratio of 14.46x and 21.31x, respectively.</p>\n<p>Considering NIO’s technology, revenues, global footprint, and cash flows are stronger than LI’s and XPEV’s, the former deserves to be traded at a much higher multiple than the latter two. Even if NIO reaches a P/S ratio of 18.1x (mid-point to XPEV's), it will drive the company’s current share price up to $51.50, which represents an upside potential of 22% based on the last traded share price of $42.34 (June 1st). And based on our forecasted revenues for FY 2025 for NIO of RMB 140 billion ($22 billion), or $18.60 per share, even a multiple half of the 18.1x would be more than sufficient to bring NIO's share price beyond $160 by 2025; we believe the trading multiple is achievable for NIO given the cash from operations and technological advancements achieved by then would place them on a trajectory of continued long-term growth within the EV industry, which is expected to continue into 2030 and beyond when the brand's level 4 autonomous driving technology development is complete and commercialized.</p>\n<p><b>Business Risks and Challenges</b></p>\n<p>As mentioned in one of my&nbsp;previous articles on NIO, the “Holding Foreign Companies Accountable Act” (“HFCA Act”) remains one of the most significant impending threats to the company’s share price. Currently, public accounting firms in China are non-compliant with PCAOB inspection rules required by the SEC, and the enactment of the HFCA Act in December 2020 requires that these public accounting firms comply with PCAOB inspection requests within three years of the enactment date; otherwise, all public companies audited by said firms will be subject to risks of de-listing. NIO is currently audited by PricewaterhouseCoopers Zhong Tian LLP, which is on PCAOB’s&nbsp;denied-access list. The potential threat of being delisted from the NYSE could be a deterrence factor to investors and ultimately hemorrhage NIO’s share price in the long run if Chinese authorities and the PCAOB cannot reach an agreement on conducting inspections soon.</p>\n<p>Another imminent challenge to NIO’s business is the ongoing global chip supply shortage. As the automotive industry becomes more dependent on chips to manage every function of their vehicles, the gap between automaker demands and chip manufacturer supplies is widened. NIO was no exception to the impacts of the ongoing chip supply crisis – in March 2021, NIO halted their production activity at the JAC-NIO manufacturing plant for five working days in order to adjust their production levels. However, the company continues to effectively navigate through the situation as proven through their increasing number of deliveries month-over-month; in NIO’s latest delivery update press release for April, the company has continued to keep up with market demand with more than 7,100 vehicle deliveries made, representing a 125% year-over-year growth.</p>\n<p>Competition within the EV sector has also ramped up in recent years. Consumer attitude towards EVs has changed drastically in the past decade due to rising concerns over climate change met with price parity between traditional petrol-fueled vehicles and EVs. The entry barrier for emerging EV makers has also lowered significantly as car battery solutions become more accessible through third-party OEMs; new entrants are now keener on participating in the profitable opportunity within the growing EV sector as initial investments become more reasonable than it was for Tesla in 2003 when EVs were still just a concept to many. In addition to new entrants, traditional petrol-fueled automakers like Ford(NYSE:F)have also started to incorporate fully battery-powered vehicles into their fleet in order to meet evolving consumer demands and remain competitive within the automotive industry. However, we believe NIO possesses the brand, customer experience, production strategy, talent and business model (further analyzedhere) needed to remain successful within the new competitive landscape in the long run.</p>\n<p><b>Conclusion</b></p>\n<p>NIO has already established a strong brand presence within the domestic Chinese market, which is currently one of the fastest growing EV markets, representing more than 40% of global EV sales in 2020. Combined with their proven ability to produce quality EVs, construct innovative charging infrastructure, achieve breakthrough progress in the development of autonomous driving technology, and execute their overseas expansion strategy, NIO is effectively narrowing the gap between them and Tesla within the EV sector on a global scale. We are confident that the next five years will be a transformational era for the EV and tech company due to increasing demands for electrification and automation within the automotive industry, which NIO has already proven to excel in. The value of its continued achievements will be reflected in its share price in no time, making them a worthy stock pick for those looking to profit off of the impending age of green transition and automation.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Can NIO Stock Reach $100? We Think It's A Matter Of 'When' Not 'If'</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCan NIO Stock Reach $100? We Think It's A Matter Of 'When' Not 'If'\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-05 12:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4432901-nio-stock-reach-100><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nNIO's share price has soared by more than 816% in the past year, peaking at almost $62 in early February before the growth stock sell-off in early March.\nThe company's innovative approach and...</p>\n\n<a href=\"https://seekingalpha.com/article/4432901-nio-stock-reach-100\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"NIO":"蔚来"},"source_url":"https://seekingalpha.com/article/4432901-nio-stock-reach-100","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1148130971","content_text":"Summary\n\nNIO's share price has soared by more than 816% in the past year, peaking at almost $62 in early February before the growth stock sell-off in early March.\nThe company's innovative approach and overseas expansion strategy, combined with the growing market sentiment on global electrification and automation are expected to boost the company's valuation.\nWe believe NIO's share price will soar beyond $160 by 2025 as global EV sales continue to ramp up with autonomous driving becoming a reality.\n\nPhoto by Drew Angerer/Getty Images News via Getty Images\nDespite it being a local Chinese electric vehicle (“EV”) brand that has only recently started its overseas expansion into Europe, NIO(NYSE:NIO)has already garnered significant international attention amidst avid investors within the EV sector in recent years. It has only been three short years since NIO made its first deliveries in mid-2018, yet many are already wondering whether its share price can reach similar heights as an industry leader, Tesla’s(NASDAQ:TSLA). Albeit a little farfetched given Tesla is currently trading at more than $600 per share with a market cap of more than $600 billion, we do believe NIO has promising potential to break $100 per share before 2025. Even Wall Street Analysts remain optimistic about the company’s future by assigning a price target of close to $60, which represents upward potential of more than 35% based on the last traded share price of $42.34 (June 1st).\nFounded in 2014, NIO has sold and delivered more than 100,000 vehicles in China to date. The company boasts a fleet of five emission-free, fully battery-powered models, ranging from sports cars to luxury sedans and full-size SUVs. In addition to their vehicles, NIO is also known for their significant progress achieved in innovative technology, including state-of-the-art battery solutions, artificial intelligence, and autonomous driving. The company has also recently turned their global expansion plans into reality, with the first overseas NIO store to open in Oslo, Norway in Q3 2021. We believe that reaching a share price of $100 is no longer a question of “if”, but instead, “when”.\nA Trailblazer in Innovative Technology\nSource:ir.nio.com\nNIO has continuously exhibited characteristics of an unsettling innovator. The brand is widely known for their breakthrough in battery swapping technology, “Power Swap”, which provides NIO owners with a fast and convenient solution to concerns over the typically limited travel range of EVs. Similar to a gas station, Power Swap is a battery swapping station that can swap a dead battery out for a fully charged one in under three minutes; a fully charged battery enables a NIO vehicle to travel up to 435 miles, which is more than double of the 181-mile average travel range of electric vehicles currently available on the market. NIO owners have the option to subscribe to the“Battery as a Service” (“BaaS”)package, which is a monthly subscription service that provides NIO owners with flexible options for battery upgrades based on personal needs. The company currently offers a standard 75 kWh battery which enables a travel range of up to 310 miles on a full charge, and an enhanced 100 kWh battery which enables a travel range of up to 435 miles on a full charge; both are available for NIO owners to choose from on a month-to-month basis under BaaS. To date, there are more than 226 battery swapping stations across China, with more on the way following a recent strategic partnership agreement between NIO and Sinopec. NIO’s vehicles are also compatible with local competitor XPeng’s(NYSE:XPEV)1,140 vehicle charging stations available across 164 cities in China, which further enhances its existing network of charging infrastructure in place for NIO owners.\nIn addition to the developed network of infrastructure needed to sustain NIO EVs in the long run, the company has also been working diligently on perfecting their autonomous driving and AI technology in order to remain competitive in the broader EV and tech space. NIO has already been performing testing on its autonomous driving systems since 2016, with their first testing on public roads in Beijing performed in 2018. The company’s commitment to the future of passenger transportation is also proven through their development of EVE, the brand’s concept car for autonomous driving which encompasses a luxurious, comfortable and safe experience powered by NIO’s NOMI AI, the world’s first in-vehicle artificial intelligence.\nTo further enhance their progress in autonomous driving technology, NIO has recently partnered with Mobileye – an Intel-owned(NASDAQ:INTC)company known for developing the “EyeQ chip” currently used by more than 27 car manufacturers for their assisted-driving technologies – to develop and commercialize driving automation that does not require human interaction (i.e. “level 4” autonomous driving). Their collaboration is expected to accelerate NIO’s launch of the “Autonomous Driving as a Service” (“ADaaS”) package, which is a monthly subscription for their autonomous driving technology, “NIO Autonomous Driving” (“NAD”). However, similar to Tesla’s “Full Self-Driving” package, the NAD technology that is expected to launch in 2022 does not yet make NIO vehicles capable of driving without human intervention, but it does catapult NIO to a comparable spot with industry leader Tesla in the race towards level 4 autonomous driving. NIO owners will have the option to subscribe to ADaaS for a monthly subscription fee of RMB 680. With more than 102,000 NIO vehicles on the road today, the new subscription package is expected to generate incremental annual sales of RMB 840 million ($132 million); the additional revenue stream is valued at approximately RMB 10 billion ($1.6 billion) upon the service’s inception, assuming an average vehicle life of 12 years with most existing NIO owners signing up.\nNIO’s continuous developments in autonomous driving technology are expected to benefit the company and its shareholders greatly in the near future. By 2025, the global autonomous cars market will become one of the fastest growing and most highly demanded segments with an estimated value of $1.6 trillion. A 6% share of this market would add a valuation of at least $100 billion to NIO’s existing $67 billion market cap, boosting its per unit share value to more than $100. Considering NIO is currently one of the very few fully electric automakers to have achieved tangible results within the autonomous driving scene, and is actively growing its overseas sales, we are confident that the company is capable of capturing more than 6% of the said market share, and achieve a per unit share price of more than $100 by 2025 with ease. Combined with the global shift in consumer preference towards electrification and automation, we are projecting vehicle sales of approximately 300,000 units by FY 2025, which will yield total revenues of approximately RMB 140 billion ($22 billion).\nSource: Author, with data from our internal forecasts (NIO_-_Forecasted_Financial_Information.pdf).\nGlobal Expansion\nSource: ir.nio.com\nAnother catalyst that will propel NIO’s share price beyond $100 is their ongoing overseas expansion efforts. NIO has been transparent about their intentions to expand globally, especially in the U.S. and Europe, as part of their plans in becoming an industry leader. NIO will be opening its first overseas sales and service centre in Oslo, Norway in September. The brand’s footprint in Norway will further expand in 2022 with four more NIO stores to open in Bergen, Stavanger, Trondheim and Kristiansand. In addition to its direct sales and service centres, NIO will also be introducing a full charging map for Europe, starting with four NIO Power Swap stations in Norway to provide new NIO owners with the convenience and range that the brand builds its success on. NIO’s flagship SUV, the ES8, which currently retails at a starting price of approximately US$67,000, will be the first model introduced in the European market, with the brand’s newest full-size sedan, the ET7, to follow in 2022.\nWith a proven sales track record in China’s luxury EV market, and specs comparable to the globally recognized Tesla, there is no reason for NIO to not succeed overseas. As mentioned in earlier sections, NIO’s vehicles have a driving range of up to 435 miles on a full charge, making it a desirable choice for potential European and American car owners looking for a reliable companion to accompany them on daily commutes to long road trips. The NIO exterior and interior designs are also modern, luxurious, and comparable to those preferred by the European and North American population. Combined with a diverse product line and price range, NIO is equipped to take on the increasing demands for EVs on a global scale.\nNIO’s Historical Performance\nJust a little more than a year ago, NIO’s share price hit an all-time low at under $2 amidst liquidity troubles despite continued vehicle sales. In mid-2020, the municipal government of Hefei, China came to NIO’s rescue with a capital injection of RMB 7 billion (approximately $1 billion). The arrangement resulted in the creation of “NIO China”, which serves as the operating entity that holds all of NIO’s core businesses and assets; NIO currently holds a 90.36% ownership interest in NIO China, while the “Hefei Strategic Investors” consortium holds the remainder 9.64%. The partnership became the company’s lifeline; the additional capital brought forth significant improvements to the company’s operations and vehicle sales, which were reflected in their strong financial performance and upward trend in share price in the summer of 2020. By the end of 2020’s second quarter, NIO’s share price rebounded by almost 20% on average after posting a 171% quarter-over-quarter increase in total revenues. The company’s share price more than tripled in 2020’s third quarter, averaging $15.40, and continued to climb towards its fourth quarter average of $38.70. By the end of the latest quarter ended March 31st, 2021, NIO’s share price averaged $50.97, and peaked at almost $62 in February which is more than 10x its IPO price in 2018. The company holds a market cap of more than $67 billion today, outgrowing its mere $1 billion market cap when it made its debut on the NYSE.\nSource: Author, with data from ir.nio.com\nNIO’s fundamentals have also shown nothing but steady improvements since its share price peaked earlier this year before the growth stock sell-off in late February. Deliveries in 2021 have continued to accelerate exponentially, with first quarter deliveries of more than 20,000 vehicles, representing almost 50% of total deliveries made in 2020. The company continues to exhibit a promising outlook with more than 7,100 vehicles delivered in April, representing an increase of more than 125% year-over-year. NIO has also maintained positive cash flows from operating activities for the first quarter of 2021, thanks to the higher deliveries and effective cost-management measures which have amped up their gross profit margin to 19.5%, comparable with industry leaders like Tesla whose first quarter gross margins were 21%. As aforementioned, we are forecasting vehicle sales of close to 300,000 units by FY 2025, which translates to approximately RMB 140 billion ($22 billion) in total revenues ($18.60 per share). Our vehicle sales forecast for FY 2025 is further corroborated by the recently renewed manufacturing agreement with joint venturer “Jianghuai Automobile Group” (“JAC”), which increases the current annual production capacity of 100,000 units to 240,000 units; the ongoing construction of “NeoPark” in Hefei, China is also expected to add annual production capacity of 1 million units, which further supports our positive outlook on NIO’s continued commitment to grow its business. Considering industry peer Tesla’s current P/S ratio of 16.43x with approximately $42 billion in annual revenues (annualization of $10.389 billion in first quarter revenues), the same proportion applied to NIO’s forecasted FY 2025 total revenues is expected to yield a P/S ratio of 8.7x, resulting in a share price of more than $160.\nNIO vs. LI and XPEV\nSource: Finviz\nWe have also compared NIO’s current P/S ratio to its domestic peers to gauge the timeline in which NIO’s share price will exceed $100. NIO currently trades at a P/S ratio of approximately 14.88x, while domestic industry peers, Li Auto(NASDAQ:LI)and XPEV, currently trade at a P/S ratio of 14.46x and 21.31x, respectively.\nConsidering NIO’s technology, revenues, global footprint, and cash flows are stronger than LI’s and XPEV’s, the former deserves to be traded at a much higher multiple than the latter two. Even if NIO reaches a P/S ratio of 18.1x (mid-point to XPEV's), it will drive the company’s current share price up to $51.50, which represents an upside potential of 22% based on the last traded share price of $42.34 (June 1st). And based on our forecasted revenues for FY 2025 for NIO of RMB 140 billion ($22 billion), or $18.60 per share, even a multiple half of the 18.1x would be more than sufficient to bring NIO's share price beyond $160 by 2025; we believe the trading multiple is achievable for NIO given the cash from operations and technological advancements achieved by then would place them on a trajectory of continued long-term growth within the EV industry, which is expected to continue into 2030 and beyond when the brand's level 4 autonomous driving technology development is complete and commercialized.\nBusiness Risks and Challenges\nAs mentioned in one of my previous articles on NIO, the “Holding Foreign Companies Accountable Act” (“HFCA Act”) remains one of the most significant impending threats to the company’s share price. Currently, public accounting firms in China are non-compliant with PCAOB inspection rules required by the SEC, and the enactment of the HFCA Act in December 2020 requires that these public accounting firms comply with PCAOB inspection requests within three years of the enactment date; otherwise, all public companies audited by said firms will be subject to risks of de-listing. NIO is currently audited by PricewaterhouseCoopers Zhong Tian LLP, which is on PCAOB’s denied-access list. The potential threat of being delisted from the NYSE could be a deterrence factor to investors and ultimately hemorrhage NIO’s share price in the long run if Chinese authorities and the PCAOB cannot reach an agreement on conducting inspections soon.\nAnother imminent challenge to NIO’s business is the ongoing global chip supply shortage. As the automotive industry becomes more dependent on chips to manage every function of their vehicles, the gap between automaker demands and chip manufacturer supplies is widened. NIO was no exception to the impacts of the ongoing chip supply crisis – in March 2021, NIO halted their production activity at the JAC-NIO manufacturing plant for five working days in order to adjust their production levels. However, the company continues to effectively navigate through the situation as proven through their increasing number of deliveries month-over-month; in NIO’s latest delivery update press release for April, the company has continued to keep up with market demand with more than 7,100 vehicle deliveries made, representing a 125% year-over-year growth.\nCompetition within the EV sector has also ramped up in recent years. Consumer attitude towards EVs has changed drastically in the past decade due to rising concerns over climate change met with price parity between traditional petrol-fueled vehicles and EVs. The entry barrier for emerging EV makers has also lowered significantly as car battery solutions become more accessible through third-party OEMs; new entrants are now keener on participating in the profitable opportunity within the growing EV sector as initial investments become more reasonable than it was for Tesla in 2003 when EVs were still just a concept to many. In addition to new entrants, traditional petrol-fueled automakers like Ford(NYSE:F)have also started to incorporate fully battery-powered vehicles into their fleet in order to meet evolving consumer demands and remain competitive within the automotive industry. However, we believe NIO possesses the brand, customer experience, production strategy, talent and business model (further analyzedhere) needed to remain successful within the new competitive landscape in the long run.\nConclusion\nNIO has already established a strong brand presence within the domestic Chinese market, which is currently one of the fastest growing EV markets, representing more than 40% of global EV sales in 2020. Combined with their proven ability to produce quality EVs, construct innovative charging infrastructure, achieve breakthrough progress in the development of autonomous driving technology, and execute their overseas expansion strategy, NIO is effectively narrowing the gap between them and Tesla within the EV sector on a global scale. We are confident that the next five years will be a transformational era for the EV and tech company due to increasing demands for electrification and automation within the automotive industry, which NIO has already proven to excel in. The value of its continued achievements will be reflected in its share price in no time, making them a worthy stock pick for those looking to profit off of the impending age of green transition and automation.","news_type":1},"isVote":1,"tweetType":1,"viewCount":192,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":115936331,"gmtCreate":1622945460023,"gmtModify":1631889692386,"author":{"id":"3572591577571735","authorId":"3572591577571735","name":"Ziling","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":4,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3572591577571735","authorIdStr":"3572591577571735"},"themes":[],"htmlText":"[Strong]&nbsp;","listText":"[Strong]&nbsp;","text":"[Strong]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/115936331","repostId":"1148130971","repostType":4,"isVote":1,"tweetType":1,"viewCount":183,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"defaultTab":"posts","isTTM":false}