-NIO declined for a few valid reasons. Namely, the fundamentals behind the stock aren’t as pretty as you might think and its valuation is too extreme.
-Now the logical question to ask is whether its current, lower price makes NIO stock a buy.
-Technical analysis may show that the stock is now oversold. This does not mean that in mid 20S the stock is a bargain. Do not confuse value with price.
-In the third quarter of 2021, NIO reported an increase in vehicle sales of 102.4% from Q3 2020 and 9.2% from Q2 2021. Total revenues of $1.52 billion showed an increase of 116.6% from the third quarter of 2020 and an increase of 16.1% from the second quarter of 2021. The gross margin was 20.3%, compared with 12.9% in Q3 2020 and 18.6% in Q2 2021. All of this is positive news.
-So what are the red flags from the Q3 2021 earnings report that most investors are overlooking? First, the vehicle margin was 18%. In Q3 2020 it was 14.5% and in Q2 2021 this figure was 20.3%. According to NIO, “[v]ehicle margin is the margin of new vehicle sales, which is calculated based on revenues and cost of sales derived from new vehicle sales only.”
-Margin declined on a quarterly basis and should be monitored closely over the next quarters as NIO has plans to increase its manufacturing capacity, start delivering the luxury ET7 model next month and its midsize ET5 sedan in September.
-Profitability continues to be a riddle hard to solve for NIO. In fact, the firm reported a net loss of $443.7 million in Q3 2021. That’s a 140.7% jump from Q3 2020 and a 333.6% leap from the results reported in Q2 2021.
-Its operations losses added up to $153.9 million in Q3 2021 — a 4.9% increase from Q3 2020 and 29.9% increase from Q2 2021.
-Meanwhile, the cost of sales in the third quarter of 2021 increased 98.3% from Q3 2020 and 13.6% from Q2 2021. These details gain further meaning if you consider this comment by NIO itself: “The increase in cost of sales over the third quarter of 2020 and the second quarter of 2021 was in line with revenue growth, which was mainly driven by the increase of vehicle delivery volume in the third quarter of 2021.”
What planet are you on? Bad fundamentals? The closest competitor to Tesla trading at 1/20th the price? Two new category killing sedans a month from release? More cash than debt? Partners like Shell, Sinopec and CATL. 2800 patents ? OK .. dont let me wake you up from your dream.
caldooninvestment
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@They_Call_Me_Smarty, planet of reality and not putting all of my grandmas savings in NIO baby
solidJaguar75495
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I guess the 100% YOU growth is irrelevant lol
caldooninvestment
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@solidJaguar75495, I guess that pro subscription is paying for your losses..
SimplyHuat
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Fishy smell ..... Shortis shortis shortis .... spreading fake news and call it analysis .... driving fear .... BIH
caldooninvestment
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@SimplyHuat, Thats called non-biased opinion on market Huat. Guys like you who put all savings in one trade won't get it ofcourse
themrchris41
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Glad you posted, just in time for that QUICK 7% pluss Today!
caldooninvestment
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@themrchris41, Oh yeah 1 day plus is definitely what we all been waiting for right? Just ignore the downside and focus on 7% green...ooookay