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08-13

$Singtel(Z74.SI)$ High short selling activity, number 1 net institutional buying last week With highest net retail investor selling last week..incoming squeeze and rally up?

2023-03-21

$SoFi Technologies Inc.(SOFI)$

2023-02-09

$RAFFLES MEDICAL GROUP LTD(BSL.SI)$ More upsides or should just take profit now?

2022-11-15

$SoFi Technologies Inc.(SOFI)$

2022-11-03

$Bank of America(BAC)$

2022-10-30

$SoFi Technologies Inc.(SOFI)$

2022-09-02

1) Wait until it hits ur TP to sell2) Buy more to average downIn the same boat as you, still waiting for positive catalysts to send Comfort up

@JohnL:$COMFORTDELGRO CORPORATION LTD(C52.SI)$ what else apart from waiting

2022-08-26

$KEPPEL CORPORATION LIMITED(BN4.SI)$Bought this awhile ago ard $5...now it's back topre pandemic high. Do you guys think there are still a lot more upsides towards TP $9 or should I sell and re-invest elsewhere?

2022-08-25

‌$Grab Holdings(GRAB)$‌tank city at the open...

2022-08-06

$AMC Entertainment(AMC)$Started small position awhile ago, time to rinse and repeat?

2022-07-01

28...27 may follow soon!

@LohYK:$DBS GROUP HOLDINGS LTD(D05.SI)$buying opportunity coming.... 29 should be coming

2022-06-30

$SINGAPORE AIRLINES LTD(C6L.SI)$Sidewaymovements since it broke below 5.20...despiteall talk about increasing traffic, headwind still inevitably strong for this stock

2022-06-30

typical of MM and these short sellers to stir up reports for their own gains.

NIO: Questions And Challenges To The Grizzly Short-Seller Report

2022-06-13

$SoFi Technologies Inc.(SOFI)$Keeps dropping..looking to DCA when it dips below $5 this week

2022-06-07

Is It worth a shot to buy Didi now?

DiDi Stock Jumps Over 6% in Premarket Trading

2022-06-04

Good read

Micron Controls 55% Of Automotive Semiconductor Memory Market

2022-06-03

$Micron Technology(MU)$Just when it starts to go on the upside, comes a downgrade that wiped out all the gains....

2022-05-26

$Under Armour Class A(UAA)$'The only way is through' UA's brand tagline previously..new CEO could pave the way for brand. Outgoing CEO too operational, not savvy enough to addvalue to shareholders

2022-05-12

Thanks for sharing!

Palantir: Bears Have Been Right, But This Is Another Buying Opportunity

2022-05-10

$SoFi Technologies Inc.(SOFI)$Why is Sofi dropping so much in PM?

Go to Tiger App to see more news

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Do you guys think there are still a lot more upsides towards TP $9 or should I sell and re-invest elsewhere?","listText":"<a href=\"https://ttm.financial/S/BN4.SI\">$KEPPEL CORPORATION LIMITED(BN4.SI)$</a>Bought this awhile ago ard $5...now it's back topre pandemic high. Do you guys think there are still a lot more upsides towards TP $9 or should I sell and re-invest elsewhere?","text":"$KEPPEL CORPORATION LIMITED(BN4.SI)$Bought this awhile ago ard $5...now it's back topre pandemic high. Do you guys think there are still a lot more upsides towards TP $9 or should I sell and re-invest elsewhere?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9995599525","isVote":1,"tweetType":1,"viewCount":597,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3583895447755437","authorId":"3583895447755437","name":"gingy","avatar":"https://static.tigerbbs.com/29f400e3962b56b8602b0cd0dedf74e5","crmLevel":3,"crmLevelSwitch":0,"authorIdStr":"3583895447755437","idStr":"3583895447755437"},"content":"target price 6.90 to 10.10 some people sell some to get their profit and leave the capital there. some leave it there for dividend depends on why u bought it for growth or dividend","text":"target price 6.90 to 10.10 some people sell some to get their profit and leave the capital there. some leave it there for dividend depends on why u bought it for growth or dividend","html":"target price 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coming","images":[{"img":"https://community-static.tradeup.com/news/d47a62fdd2deeadc03c85c91b0abaad3","width":"1080","height":"2549"}],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9045401514","isVote":1,"tweetType":1,"viewCount":0,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":1,"langContent":"EN","totalScore":0},"isVote":1,"tweetType":1,"viewCount":529,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9045957470,"gmtCreate":1656553557490,"gmtModify":1676535852687,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"authorIdStr":"4101449357353590","idStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/C6L.SI\">$SINGAPORE AIRLINES LTD(C6L.SI)$</a>Sidewaymovements since it broke below 5.20...despiteall talk about increasing traffic, headwind still inevitably strong for this stock","listText":"<a href=\"https://ttm.financial/S/C6L.SI\">$SINGAPORE AIRLINES LTD(C6L.SI)$</a>Sidewaymovements since it broke below 5.20...despiteall talk about increasing traffic, headwind still inevitably strong for this stock","text":"$SINGAPORE AIRLINES LTD(C6L.SI)$Sidewaymovements since it broke below 5.20...despiteall talk about increasing traffic, headwind still inevitably strong for this stock","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9045957470","isVote":1,"tweetType":1,"viewCount":297,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9045996885,"gmtCreate":1656549657147,"gmtModify":1676535851124,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"authorIdStr":"4101449357353590","idStr":"4101449357353590"},"themes":[],"htmlText":"typical of&nbsp;MM and these short sellers to stir up reports for their own gains.&nbsp;","listText":"typical of&nbsp;MM and these short sellers to stir up reports for their own gains.&nbsp;","text":"typical of MM and these short sellers to stir up reports for their own gains.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9045996885","repostId":"1121505043","repostType":4,"repost":{"id":"1121505043","kind":"news","pubTimestamp":1656561665,"share":"https://ttm.financial/m/news/1121505043?lang=&edition=fundamental","pubTime":"2022-06-30 12:01","market":"us","language":"en","title":"NIO: Questions And Challenges To The Grizzly Short-Seller Report","url":"https://stock-news.laohu8.com/highlight/detail?id=1121505043","media":"seekingalpha","summary":"SummaryShort-seller Grizzly Research has released a report outlining findings of alleged fraud by NIO on Tuesday evening.The report attempted to outline how NIO, through an unconsolidated entity, is f","content":"<html><head></head><body><p><b>Summary</b></p><ul><li>Short-seller Grizzly Research has released a report outlining findings of alleged fraud by NIO on Tuesday evening.</li><li>The report attempted to outline how NIO, through an unconsolidated entity, is falsely inflating revenue and net income pertaining to its BaaS business.</li><li>The report also accused CEO Bin Li of association with fraudulent activities in the past. The information was largely used as support for Grizzly&#39;s claims of financial manipulation at NIO.</li><li>However, we believe some of the information reported by Grizzly have been exaggerated to support its short bias against NIO. We also question the validity of some of the quantified impacts that Grizzly is claiming against NIO&#39;s BaaS operations.</li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/346379c1e5a1a4087e614ef0b8a18caa\" tg-width=\"1080\" tg-height=\"720\" referrerpolicy=\"no-referrer\"/><span>Drew Angerer/Getty Images News</span></p><p>Grizzly Research (&#34;Grizzly&#34;) has released a short-seller report on NIO (NYSE:NIO) Tuesday morning, citing the Chinese electric vehicle (“EV”) company has engaged in the exaggeration of revenue and profitability via aggressive accounting methods and fraudulent means. In addition to outlining the allegedmeasures NIO has taken to falsely inflate its top- and bottom-line since 2020, Grizzly has also gathered extensive research in an attempt to character-assassinate NIO CEO Bin Li in order to “dot the i’s and cross the t’s” in its argument that the three core elements of fraud – opportunity, incentive and rationalization – exist in this situation for the EV maker.</p><p>While some of the findings raised in the short-seller report may raise questions that only NIO management can answer, there are also questionable and groundless arguments made by Grizzly that could significantly mislead and deceive existing and potential investors in the EV stock. The following analysis will focus on an overview of the short-seller’s core claim against NIO – namely, false inflation of revenue and net income via aggressive accounting and potentially fraudulent means – and provide a walkthrough of questions / challenges we have over the validity of some of those claims.</p><p><b>Accounting Crash Course: NIO’s BaaS Revenue Recognition Method</b></p><p>Through publicly disclosed information within NIO’s audited annual report, Grizzly had identified that NIO is frontloading and inflating revenue recognition pertaining to its battery-as-a-service (“BaaS”) sales via an unconsolidated related party.</p><p>In 2020, NIO, alongside an external consortium of investors that consist of EV battery maker CATL, Hubei Science Technology Investment Group, and a subsidiary of Fuotai Junan International Holdings Limited, have together created the joint venture “Wuhan Weineng Battery Asset Co., Ltd.,” (“Weineng”). Weineng was established in 2020, the same time when NIO’s battery lending service BaaS was introduced.</p><p>Under BaaS, NIO customers are eligible for a one-time discount of up to RMB 128,000 ($19,133) on the vehicle purchase if they opt for the battery lending subscription program instead of buying the battery with the vehicle upfront. This strategy has been an effective mean in fuelling the adoption of NIO EVs in China, especially with additional government subsidies for purchases that are compatible with battery swapping technology. All sales and costs pertaining to BaaS are managed by Weineng.</p><p>Now, the Weineng joint venture, in which NIO holds a 19.8% equity interest in, has been accounted for as an “equity-accounted investment” on the EV maker’s financial statements, given the definition of control under GAAP-based accounting has not been met (further discussed in later sections). Under GAAP-based accounting for related party transactions, “intragroup related party transactions and outstanding balances are eliminated, except for those between an investment entity and its subsidiaries measured at fair value through profit or loss, in the preparation of consolidated financial statements of the group”:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b533b2a1e657134b3b33f231c2b11f74\" tg-width=\"640\" tg-height=\"292\" referrerpolicy=\"no-referrer\"/><span>GAAP Rules on Related Party Disclosures (IAS)</span></p><p>Based on NIO’s disclosures within its audited annual report on its revenue recognition method pertaining to BaaS sales, the EV maker sells its battery packs to Weineng on a “back-to-back” basis when a vehicle is sold to a customer subscribed to BaaS:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d726db76c4884663e28c157208e5cd77\" tg-width=\"640\" tg-height=\"150\" referrerpolicy=\"no-referrer\"/><span>NIO Revenue Recognition Policy on BaaS Sales (NIO 2021 20F)</span></p><p>In compliance with GAAP-based accounting for revenue recognition, a sale is reported to the income statement when a performance obligation is satisfied. Under NIO’s affiliation with Weineng, NIO sells Weineng a battery pack when a customer buys a vehicle with BaaS subscription. The performance obligation here is that NIO needs to provide a battery pack to Weineng, and once this is satisfied, NIO is permitted to recognize revenue on the battery sale based on a pre-contracted transaction price for the performance obligation. For NIO, the battery sold would have been previously considered as inventory. Following the recognition of the battery sale, NIO would have also recorded cost of sales pertaining to removing the battery from its inventory balance on the balance sheet:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2203faf29e5b271342335935df358d86\" tg-width=\"389\" tg-height=\"208\" referrerpolicy=\"no-referrer\"/><span>Journal Entries for Battery Sales Business Model (Author)</span></p><p>In Weineng’s case, however, its performance obligation to customers is the provision of battery lending services on a monthly or annual basis, depending on the subscription option. As such, Weineng can only recognize monthly / annual BaaS revenue over time when it satisfies its battery lending obligation to customers. Weineng would also have to record depreciation costs over the useful life of its batteries, which are considered property, plant and equipment used in facilitating its service business:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/4bf30456c1ff78b902edfa34d719f150\" tg-width=\"598\" tg-height=\"175\" referrerpolicy=\"no-referrer\"/><span>Journal Entries for BaaS Business Model (Author)</span></p><p>This arrangement essentially allows NIO to recognize 100% of revenues pertaining to the battery pack sold to Weineng upfront upon selling a vehicle booked on BaaS on a one-for-one basis, instead of recognizing BaaS revenue and related depreciation costs on the batteries used in the BaaS business over time. The disclosed BaaS revenue recognition method for NIO also infers that the number of battery packs sold to Weineng should be equivalent to the number of BaaS subscribers as of period-end. BaaS revenues and related costs of sales (e.g. depreciation costs on batteries) recognized over time are instead in the books of Weineng, in which NIO accounts for on its balance sheet as an equity-accounted investment.</p><p>Because Weineng is an equity-accounted investment and not a consolidated entity in which NIO controls under the definition set out by GAAP-based accounting, NIO is not required to perform intragroup eliminations pertaining to the related party transaction. Instead, it is required to disclose the relationship, as well as the related amounts if material. This information is disclosed in NIO’s 2021 20 Funder “Note 26. Related Party Balances and Transactions”. Revenue and income generated by Weineng are accounted for in NIO’s financial statements as “share of (loss) / income of equity investees” pro-rated for its non-controlling interest.</p><p><b>Grizzly’s Core Short Thesis</b></p><p>Grizzly alleges the move is a fraudulent measure taken by NIO to “exaggerate revenue and profitability”. The short-seller has accused NIO of using the accounting “loophole” to frontload battery revenues pertaining to BaaS that should have been recognized over a course of about seven years (i.e. battery discount on BaaS vehicle purchase, divided by annual BaaS subscription fee).</p><p>In addition to frontloading revenue recognition on BaaS sales, Grizzly has also identified a discrepancy between the number of active BaaS subscribers and battery packs owned by Weineng as of September 30, 2021. Grizzly found thatWeineng had ownership of 40,053 battery packs as of September 30, 2021, but only had 19,000 active BaaS subscribers during the period, which is inconsistent with NIO’s claims that it only records battery sales to Weineng on a back-to-back basis with BaaS vehicle sales. Grizzly has attributed the discrepancy as NIO’s way of artificially inflating revenues by selling more battery packs to Weineng than it needs to fulfil BaaS performance obligations.</p><p>In order to support its claim that NIO is defrauding investors via the unconsolidated related party, Grizzly has also gathered additional research in an attempt to support the three key elements of the fraudulent triangle:</p><p><b>Opportunity:</b>As mentioned in the accounting overview section, the ownership structure between NIO and Weineng is accounted for as an equity-accounted investment, which allows NIO to bypass related party transaction eliminations on its financial statements. This accordingly provides an opportunity for NIO to artificially inflate its revenues at the group level by recording sales to the equity-accounted subsidiary, without the need to back it out at period end. Under GAAP-based accounting rules on related party transactions, NIO is required to disclose material details to the relationship, in which it has complied with.</p><p>The organizational structure also provides NIO an ability to recognize BaaS revenues upfront, instead of over an extended period of time given the difference in performance obligation it owes toWeinengcompared to thoseWeineng owes to BaaS subscribers. Grizzly also claims the method has allowed NIO to bypass depreciation costs on battery assets to the tune of RMB 336 million per year.</p><p><b>Incentive:</b>Grizzly has gone through extensive measures to dig up evidence to support NIO has a valid incentive for exaggerating its revenue and profitability. Citing an agreement between NIO and a state-backed consortium which has invested in a wholly-owned subsidiary “NIO China”, which requires NIO to redeem the investment upon failure in meeting pre-established performance metrics, such as achieving revenues of RMB 120 billion by 2024. However, the publicly disclosed information per NIO’s regulatory filings does not specify whether the RMB 120 billion revenue performance metric is required on an annual basis or on a cumulative basis between the time at which the agreement was forged with the state-backed investment consortium and 2024.</p><p>Grizzly has also inferred incentive for NIO to exaggerate its top- and bottom-line as a mean to pretty its valuation prospects, and attract investors from the public market.</p><p><b>Rationalization:</b>The short-seller report lacks support for how NIO tried to rationalize the alleged fraudulent reporting behaviour. However, Grizzly has proceeded to gather evidence to bolster its claim of why the likelihood of fraud at NIO is high. These include findings about NIO CEO Li’s past association with personnel that have been previously linked to high-profile fraudulent financial reporting cases like Luckin Coffee(OTCPK:LKNCY). Grizzly has also alluded to questionable behaviour by NIO CEO Li, such as pledging a NIO-affiliated subsidiary, “NIO User Trust”, in which Li personally controls to UBS AG without directly addressing the matter to shareholders. While these findings may warrant clarification from management, there is insufficient ground to warrant a fraudulent sentence to the company.</p><p>NIO management has also refuted Grizzly’s claims, saying allegations outlined in the report are “without merit and contains numerous errors, unsupported speculations and misleading conclusions and interpretations”, and has committed to bolstering public disclosures going forward to protect shareholders’ interests. Nowhere has the company tried to outright rationalize fraudulent reporting.</p><p><b>Challenging Grizzly’s Conclusion on “Control” Established by NIO Over Weineng</b></p><p>In addition to character assassination on Li to support its claims for fraudulent reporting behaviour at NIO, Grizzly has also attempted to conclude NIO’s control over Weineng. As mentioned in earlier sections, if NIO effectively “controls” Weineng, it would have to consolidate the investment and eliminate any earnings recorded via related party transactions.</p><p>First, Grizzly has identified “conflicting disclosure” between NIO’s claim that it has “significant influence” over Weineng in one place, and NIO’s claim that it only has “limited control over the business operations” ofWeinengin another place within a same regulatory filing. However, the words “significant influence” and “control” used within NIO’s regulatory filings are defined differently under GAAP-based accounting rules from general definitions of power that everyday investors are familiar with.</p><p>Significant influence is defined as “the power to participate in the financial and operating policy decisions of the investee without the power to control or jointly control those policies” under GAAP-based accounting. Significantly influence is typically established when an “entity holds, directly or indirectly, 20% or more of voting power of the investee”. NIO’s 19.8% equity interest in Weineng is sufficient to presume its “significant influence” over the investment:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/505c64f7bc18c02131dd830e5f2a5462\" tg-width=\"640\" tg-height=\"260\" referrerpolicy=\"no-referrer\"/><span>GAAP Rules on Investments in Associates and Joint Ventures (IAS)</span></p><p>Pointing to our earlier reference to the definition of control established in GAAP-based accounting, the acquiring party only establishes “control” over the acquired party if it demonstrates three primary elements:</p><p>1. “<b>Power</b>” over the acquired entity, which is defined under GAAP as a substantive right exercised by an acquirer over the acquiree for non-protective benefits (e.g. exercising rights without the need for breach of contract or majority investor support). Based on publicly disclosed information in NIO’s regulatory filings, it only holds one of nine board seats on Weineng. There is also no mention of voting agreements that would pass on majority board and/or owner voting rights to NIO. With one of nine board seats, and a 19.8% equity interest, NIO does not exhibit power over Weineng to establish control.</p><p>2. Exposure to<i>variable returns</i>from the acquiree based on the acquirer’s involvement. NIO does not generate additional fees from Weineng based on Weineng’s performance. NIO is only exposed to Weineng’s earnings through its equity-accounted share of the investment.</p><p>As for the acquirer’s involvement in interfering with returns generated from the acquiree, Grizzly has pointed to the installation of two existing NIO executives to Weineng in management roles that include “Legal Representative and Chairman” and “General Manager and Director”. However, considering NIO’s significant influence over Weineng as defined under GAAP rules explained earlier, it is not unusual for the two parties to share employees or for NIO to “participate in the financial and operating policy decisions” of Weineng through the two shared employees. As such, NIO can account for its investment inWeinengas an equity-accounted investment, as long as “control” is not established even if it has installed employees at Weineng. Based on NIO’s failure to meet criterion 1 “power”, it already fails to establish control under GAAP rules over Weineng based on the existing ownership and voting structure disclosed in regulatory filings.</p><p>Grizzly has also alluded to the installation of two NIO executives in the daily operations of Weineng as a “major conflict of interest”. However, the auditor’s report per NIO’s audited 2021 20F states that “the company has maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in<i>Internal Control – Integrated Framework</i>(2013) issued by the COSO”. The COSO framework requires that internal controls address segregation of duty requirements to ensure fair presentation of financial information without material misstatements whether due to error or fraud. As such, it is reasonable to believe that segregation of duty controls in place pertaining to the two executives’ roles in both NIO and Weineng have been tested as effective as of the reporting date.</p><p>3. The acquiring party is a<i>principal</i>in the transaction, and not an agent. Under GAAP-based accounting, an agent is “primarily engaged to act on behalf and for the benefit of another party…[and] does not control an investee when it exercises decision-making rights delegated to it”. In determining whether NIO is an agent over Weineng, the i) scope of NIO’s decision-making authority over Weineng, ii) the rights held by other investors in Weineng, iii) the remuneration in which NIO is entitled to in its affiliation with Weineng, and iv) NIO’s exposure to variability of returns from its interest in Weineng must be considered:</p><ul><li>Based on the foregoing analysis, we know that NIO’s sole decision-making authority over Weineng is limited given it only holds 19.8% equity interest with one in nine board seats in the joint venture. The two NIO executives installed in the daily operations of Weineng also do not exhibit characteristics of sole control over the joint ventures’ business.</li><li>The remainder of the investment consortium over Weineng holds the remaining eight of nine board seats, and 80.2% equity interest in the joint venture. There have also been no mention of signed-over voting rights by the investment consortium to NIO in publicly disclosed information that would give NIO control over Weineng.</li><li>In addition to battery sales, NIO is also entitled to service revenue earned from Weineng through service agreements. NIO earns revenue for providing “battery packmonitoring, maintenance, upgrade, replacement, IT system support, etc.” to Weineng via monthly service charges. As of the reporting year ended December 31, 2021, service revenues pertaining to the service agreements between NIO and Weineng were immaterial according to disclosures in “Note 2. Summary of Significant Accounting Policies”, section<i>(r) Revenue recognition</i>in the 2021 20F.</li><li>As discussed in the control assessment under criterion 2, NIO’s exposure to variability of returns in its investment in Weineng is insufficient to establish control under GAAP-based accounting.</li></ul><p><b>Challenging Grizzly’s Quantification of NIO’s Alleged Revenue and Profit Inflation</b></p><p>Grizzly believes NIO has inflated revenue and net income by “about 10% and 95%, respectively”, via its affiliation with Weineng. Grizzly’s calculations, as well as our skepticism, is outlined as follows:</p><p><b>1. Frontloaded Revenue via Battery Sales to Weineng</b></p><p><b>Grizzly’s accusation.</b>As discussed in the foregoing analysis, Grizzly identified that NIO has been recognizing battery revenues pertaining to BaaS upfront via its affiliation with Weineng. Instead of recognizing BaaS revenues over time when the service performance obligation is satisfied, NIO is able to recognize 100% of battery revenues sold to customers via BaaS subscriptions through the Weineng JV. Grizzly claims that this arrangement effectively allows NIO to pull forward seven years of BaaS revenue upfront.</p><p><b>Grizzly’s calculation of quantified impacts.</b>Considering vehicle purchase discounts ranging RMB 70,000 (70/75 kWh battery pack) to RMB 128,000 (100 kWh battery pack) upon buyer’s subscription to BaaS, Grizzly has taken the lower end of the range (i.e. RMB 70,000) as the proxy for battery pack revenues. Based on annual BaaS subscription fees at RMB 11,760 (RMB 980/mo.) for the 70 kWh battery pack, which yields a vehicle discount of RMB 70,000 with subscription to BaaS, Grizzly has assumed a BaaS revenue recognition timeline of about seven years (i.e. RMB 70,000 discount, divided by RMB 11,760 annual BaaS subscription fee, adjusted for inflation) – we consider this a reasonable assumption.</p><p>Now, as of September 30, 2021, a public regulatory filing by Weineng disclosed that it had 19,000 active BaaS subscribers. 18% of its subscription base were subscribed to the RMB 1,480/mo. 100 kWh battery pack, and 82% were subscribed to the RMB 980/mo. 70/75 kWh battery pack at the time.</p><p>Grizzly’s calculation of inflated revenues and income pertaining to NIO’s sale of 19,000 BaaS-related batteries to Weineng in the nine months ending September 30, 2021 is as follows:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/21e7d58b24ac2bde6344b4206ef9be8e\" tg-width=\"592\" tg-height=\"395\" referrerpolicy=\"no-referrer\"/><span>Grizzly&#39;s Computation of Inflated Revenue and Income Pertaining to Pulled Forward BaaS Sales (Grizzly Research)</span></p><p>As of the nine months ended September 30, 2021, NIO had generated RMB 2,796 million in revenues from the sale of batteries to Weineng (full year 2021 revenues generated from Weineng: RMB 4,138 million, 11% of total NIO 2021 revenue). Based on 19,000 active BaaS subscribers, and ownership of 40,053 battery packs owned as reported by Weineng as of September 30, 2021, Grizzly estimates that only 47% of the RMB 2,796 million in revenues generated from the sale of goods to Weineng are related to “real” BaaS sales. Essentially, Grizzly claims only RMB 1,326 million of RMB 2,796 million in sales of goods to Weineng recognized on NIO’s income statement in the nine months ended September 30, 2021 are related to real BaaS battery sales.</p><p>The RMB 1,326 million pertaining to 19,000 battery packs sold to Weineng for the number of active BaaS subscribers at the time is effectively the “upfront” revenue recognized by NIO, which should have been recognized over a course of seven years instead based on the estimated performance obligation timeline discussed in earlier sections. Without Weineng, NIO would have instead had to recognize BaaS revenues related to the 19,000 subscribers over time, which is equivalent to RMB 179 million in the nine month period ending September 30, 2021. This essentially means NIO had allegedly pulled forward RMB 1,147 million in revenues related to BaaS sales in the nine months ending September 30, 2021.</p><p>In the nine months ended September 30, 2021, NIO had reported total revenue of RMB 26,236 million and net losses of RMB 1,874 million. The RMB 1,147 million in pulled forward BaaS revenues represents 4% of total revenues recognized over the nine-month reporting period.</p><p>To generate the “adjusted” net income that NIO would have reported had Weineng never existed, Grizzly had removed RMB 1,147 million in pulled forward revenues pertaining to BaaS sales directly from actual reported net losses of RMB 1,874 million. This accordingly yields adjusted net losses of RMB 3,021 million for the nine months ending September 30, 2021 at NIO, or a variance of 61%.</p><p><b>Issue with Grizzly’s claim.</b>In Grizzly’s calculation of adjusted net losses had BaaS revenue never been pulled forward at NIO via its affiliation with Weineng, the short-seller did not add back costs of sales that NIO would have recognized when it sold the battery packs to Weineng and recorded the related revenue.</p><p>While profit margins on NIO’s battery pack sales to Weineng are not disclosed, Grizzly had used 20% as a proxy, which is “consistent with the margin of an entire vehicle [considering] batteries are a cost center for all vehicles”. Using the 20% profit margin proxy on 19,000 battery pack sales to Weineng totalling RMB 1,326 million in the nine months ending September 30, 2021, NIO would have recorded related cost of sales of RMB 1,060.9 million (i.e. 0.8% cost of revenues x RMB 1,326 million battery revenues recorded on the sale of 19,000 units to Weineng in the nine months ending September 30, 2021).</p><p>When Grizzly removed/pulled forward BaaS revenues of RMB 1,147 million from NIO’s actual net losses of RMB 1,874 million reported in the nine months ending September 30, 2021, Grizzly should have also added back related cost of sales totalling RMB 917.6 million in determining the adjusted net income reported.</p><p><b>Livy’s revised calculation of quantified impacts.</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/324a74d6eeeb60a4bd2da9251d4d6ed8\" tg-width=\"640\" tg-height=\"416\" referrerpolicy=\"no-referrer\"/><span>Livy&#39;s Computation of Revenue and Income Variances Pertaining to NIO&#39;s Alleged Frontloading of BaaS Sales (Author)</span></p><p>The above revised net income adjustment backs out alleged pulled forward BaaS revenues by NIO through its affiliation with Weineng from actual net losses reported by NIO in the nine months ending September 30, 2021. The orange-highlighted cells represent the incremental cost of sales pertaining to pulled forward BaaS revenues that should have been added back to adjusted net income in order to represent a fair representation of NIO’s adjusted net losses for the nine months ending September 30, 2021 if Weineng never existed and the EV maker had to recognize BaaS revenues over time. This adjustment accordingly reduces the variance of 61% from Grizzly’s calculation of adjusted net losses, to 12% – a material difference that, like Grizzly is accusing NIO of doing, misleads investors on the matter discussed.</p><p><b>2. Revenues from Oversupplied Batteries to Weineng</b></p><p><b>Grizzly’s accusation.</b>Based on NIO’s revenue recognition method on BaaS sales, the number of battery packs sold to Weineng should be equivalent to the number of vehicle buyers that have subscribed to BaaS at the time of purchase. Based on 19,000 active BaaS subscribers reported by Weineng as of September 30, 2021, it is easy to assume that NIO should have only sold 19,000 battery packs to Weineng in the nine months ending September 30, 2021 as well to comply with the EV maker’s revenue recognition method on BaaS sales outlined in its 2021 20F.</p><p>However, Weineng had reported ownership of 40,053 battery packs as of September 30, 2021, which exceeds its active subscriber base of 19,000 by 21,053 units. As such, Grizzly has accused NIO of intentionally overselling battery packs to Weineng to inflate revenues.</p><p>While the discrepancy is indeed a question for management, Grizzly had cited that there is no need for Weineng to hold that many additional battery packs, even for operational purposes. Grizzly had gone on to explain its field work done at NIO Power Swap stations to verify that there is no difference between BaaS battery packs owned by Weineng and battery packs used in swap stations owned by NIO. However, we believe the additional field work is a moot point, considering NIO Power Swap operations are not related to Weineng. Weineng only facilitates NIO’s BaaS battery lending business, and nothing else – Grizzly did not even have to go out of its way to check on NIO’s Power Swap stations and hold conversations with sales staff at NIO’s car centers.</p><p><b>Livy’s response.</b>While the number of battery packs owned by Weineng should essentially be equivalent to the number of active BaaS subscribers, there is a possibility that a total of 40,053 NIO vehicle sales between 2020 when BaaS was established and September 30, 2021 had subscribed to BaaS. Perhaps, as of reporting date on September 30, 2021, there were 21,053 BaaS subscribers that have halted monthly subscriptions, which is not surprising given the third quarter is not a typical driving season, and there is a possibility that these NIO vehicle owners did not need to use their vehicles during the period.</p><p>Grizzly has also supported its claim that NIO oversupplied battery packs to Weineng to intentionally inflate revenues by saying that Weineng has no storage facility to store its 21,053 excess battery packs as of September 30, 2021. However, we do not find this surprising, as BaaS subscribers that have halted monthly subscriptions might be holding onto the emptied battery packs on consignment or have returned them to a NIO servicing center where NIO has held onto these Weineng-owned battery packs on consignment. The lack of battery pack storage facility owned by Weineng does not conclude that its ownership of the excess battery packs is fraudulent and made up.</p><p>There can be many reasons why a discrepancy exists between the number of active BaaS subscribers and battery packs owned by Weineng at the end of a reporting period. The above are just two assumptions that could invalidate Grizzly’s accusation (which is also an assumption). The real answer to the discrepancy can only be explained by NIO and Weineng management.</p><p><b>Grizzly’s calculation of quantified impacts.</b>In determining the inflated revenue and earnings specific to the allegedly oversupplied battery packs from NIO to Weineng, Grizzly had performed the following calculations:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a2497da8272eec2b6020c07b7ee06b1f\" tg-width=\"580\" tg-height=\"420\" referrerpolicy=\"no-referrer\"/><span>Grizzly&#39;s Computation of Revenue and Net Income Variances Pertaining to Oversupplied Batteries (Grizzly Research)</span></p><p>In deriving the inflated revenues related to the allegedly oversupplied battery packs, Grizzly had determined the percentage of battery packs owned by Weineng as of September 30, 2021 that were in excess to its active subscriber base as 53% (i.e. 21,053 excess battery packs, divided by 40,053 battery packs owned by Weineng as of September 30, 2021). The percentage was applied to total revenue recognized by NIO pertaining to the sale of battery packs to Weineng in the nine months ending September 30, 2021, resulting in oversold battery revenues of RMB 1,470 million (i.e. 53% oversold batteries x RMB 2,796 million in related party revenues from Weineng recorded by NIO for the nine months ending September 30, 2021).</p><p>In the nine months ended September 30, 2021, NIO had reported total revenue of RMB 26,236 million and net losses of RMB 1,874 million. The RMB 1,470 million in oversold battery revenue represents 6% of total NIO revenues recognized over the nine-month reporting period.</p><p>Considering Grizzly’s 20% profit margin assumption on battery pack sales as discussed in earlier sections, the oversold battery packs to Weineng would have generated net income of RMB 294 million in the nine months ending September 30, 2021. As such, backing out RMB 294 million in overstated profits back to NIO’s actual reported net losses of RMB 1,874 million in the nine-month period ending September 30, 2021 would have yield adjusted net losses of RMB 2,168 million, representing a variance of 16%.</p><p>We have no issues with this calculation performed by Grizzly, other than concerns over the short-seller’s claims that these 20,053 battery packs were intentionally “oversold” by NIO to Weineng to artificially boost revenues.</p><p><b>3. Shifting Depreciation Costs</b></p><p><b>Grizzly’s Accusations.</b>Grizzly has accused NIO of indirectly shifting depreciation costs on the battery packs sold to Weineng, saving the EV maker north of RMB 336 million in depreciation expense on an annual basis.</p><p>Specifically, Grizzly has assumed a 20% profit margin on NIO’s battery sales totalling RMB 2,796 million generated from Weineng in the nine months ending September 30, 2021. This represents battery assets valued at a cost basis of RMB 2.25 billion (i.e. 80% cost x RMB 2,796 in battery sales to Weineng, adjusted for minor rounding differences) removed from the EV maker’s balance sheet over the same period.</p><p>Based on the five to eight years useful life attributable to equipment, including battery packs, used in NIO’s Power Swap business as disclosed in its 2021 20F, Grizzly has assumed an annual depreciation rate of about 15% on the battery packs sold to Weineng and removed from NIO’s balance sheet in the nine months ending September 30, 2021. This is consistent with the assumed BaaS revenue recognition timeline of about seven years as discussed in earlier sections. As such, Grizzly has accused NIO of avoiding depreciation costs of RMB 336 million (i.e. 15% battery depreciation rate x RMB 2,796 million in battery pack sales to Weineng) in the nine months ending September 30, 2021. The short-seller has also alluded to the RMB 336 million as a proxy for annual depreciation costs that NIO has avoided via its arrangement with Weineng.</p><p><b>Issue with Grizzly’s claim.</b>There are two folds to this situation:</p><p><b>1. BaaS Business Model:</b>Under the BaaS business model, the battery packs are considered equipment used in facilitating a service business. As such, the related battery packs would be subjected to depreciation over its useful life. In NIO’s case, if Weineng never existed and the EV maker consolidates its BaaS business, NIO would have had to recognized BaaS revenues pertaining to the 19,000 battery packs that Grizzly has attributed to the BaaS business over seven years, and accordingly record depreciation costs on these battery packs as well over their useful lives of about seven years. As mentioned in earlier sections, the related journal entries under the BaaS business model is as follows:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0e89611dda7a7e83881997628fe7aae3\" tg-width=\"640\" tg-height=\"187\" referrerpolicy=\"no-referrer\"/><span>Journal Entries for BaaS Business Model (Author)</span></p><p><b>2. Battery Sales Business Model:</b>in the current situation where NIO has sold the battery packs to Weineng, the battery packs are considered inventory to NIO. There is no depreciation costs related to inventory under GAAP-based accounting. Instead, NIO needs to record the costs of this inventory when they are removed from its balance sheet once the sale is recognized. As mentioned in earlier sections, the related journal entries under the battery sale business model is as follows:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2203faf29e5b271342335935df358d86\" tg-width=\"389\" tg-height=\"208\" referrerpolicy=\"no-referrer\"/><span>Journal Entries for Battery Sales Business Model (Author)</span></p><p>Now, in NIO’s current actual situation, it is engaged in a battery sales business model under its performance obligation to Weineng, while Weineng is engaged in a BaaS business model under its performance obligation to BaaS subscribers.</p><p>As discussed in our first challenge to Grizzly’s calculations pertaining to pulled forward revenue on BaaS battery sales to Weineng, NIO would have recorded costs of sales pertaining to the sold battery inventory when it recognized the related revenues. And this cost of sales number, based on a 20% profit margin assumption consistent with that used by Grizzly, would have accounted for the costs of battery inventory removed from NIO’s balance sheet upon completion of the sale to Weineng. This is consistent with Grizzly’s own calculation pertaining to profit margins on the battery packs that it alleges NIO had oversupplied to Weineng, which is inclusive of cost of sales related to written off inventory incurred by NIO upon recognition of related revenues.</p><p>If NIO was engaged in the BaaS business model itself, without the intervention of Weineng, it would have recognized depreciation at a rate of 15% per year on the battery packs. However, under the upfront sale of related battery packs to Weineng, NIO would have recorded related cost of sales at an upfront rate of 80% as well. So basically, instead of recording revenues and depreciation costs on battery packs over time, NIO essentially recorded revenues and battery inventory costs upfront under its current arrangement with Weineng.</p><p><b>Grizzly’s calculation of quantified impacts.</b>Grizzly’s accusation that NIO has overstated revenues and earnings by 10% and 95%, respectively, through its affiliation with Weineng is calculated as follows:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/96f972c8d488406cd690b0672265e62b\" tg-width=\"576\" tg-height=\"498\" referrerpolicy=\"no-referrer\"/><span>Grizzly&#39;s Computation of Total Revenue and Income Inflation (Grizzly Research)</span></p><p>As discussed in earlier sections, NIO’s pulled forward BaaS revenues and inflated battery sales revenues via its affiliation with Weineng represent 4% and 6% of its total revenues, respectively, recognized in the nine months ending September 30, 2021. This represents the 10% in inflated NIO revenues as Grizzly has outlined in the above calculation.</p><p><b>Livy’s revised calculation of quantified impacts.</b>While we have yet to reconcile the RMB 1,777 million in total inflated net income that Grizzly has accused NIO of recognizing (please let us know in comments if you know), we believe the 95% variance identified by Grizzly is not a fair presentation of the quantified impact of its core short thesis.</p><p>Our calculation of the quantified impact pertaining to Grizzly’s accusations that NIO has inflated revenue and earnings through (1) pulling forward BaaS sales, and (2) oversupplying batteries to Weineng, is as follows:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/1ffe9833bb562f66e5365e077d7741d4\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\"/><span>Livy&#39;s Computation of Alleged Overstatements Related to Alleged Frontloading of BaaS Revenue (Author)</span></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/230a54833c34b3a9920a03524c28e960\" tg-width=\"640\" tg-height=\"361\" referrerpolicy=\"no-referrer\"/><span>Livy&#39;s Computation of Alleged Overstatements Pertaining to Alleged Overselling of Battery Supplies (Author)</span></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ccf9a3a0482b46cee102e66d5137113f\" tg-width=\"640\" tg-height=\"220\" referrerpolicy=\"no-referrer\"/><span>Livy&#39;s Computation of Alleged Revenue Overstatement (Author)</span></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0c7ec5a61d7fd491aec81d9a48a92020\" tg-width=\"640\" tg-height=\"188\" referrerpolicy=\"no-referrer\"/><span>Livy&#39;s Computation of Alleged Overstatement in Net Income (Author)</span></p><p>Under Grizzly’s accusations of inflated revenue and earnings by NIO through its affiliation with Weineng, if found valid (which we remain skeptical of), NIO would have overstated net losses in the nine months ending September 30, 2021 by 28% instead of the 95% that Grizzly alleges – a material difference that again misleads investors on the estimated quantified impact pertaining to the accusations claimed by the short-seller. The net income variance of RMB 523 million ($78 million) found in our calculation is also immaterial (&lt; 1%) based on NIO’s market value of $58.38 billion as of September 30, 2021 and NIO’s market value of approximately $35 billion today.</p><p><b>Final Thoughts</b></p><p>As discussed in the introduction of this analysis, Grizzly had also touched on things like NIO CEO Li’s association with fraudulent personnel, the pledge of NIO User Trust to UBS AG, and conflict of interests to further support its argument that NIO is engaged in fraudulent financial reporting. However, these are groundless allegations that have yet to be substantiated to infer Li is committing fraud via NIO’s operations. While investors should always exercise professional skepticism on publicly disclosed information in regulatory filings when making investment decisions, the same skepticism should also be placed on external claims – such as those by the short-seller, commentary by external sources, and/or even commentary herein – especially if they argue that correlation = causation (e.g. Grizzly’s method in inferring that fraud at NIO is substantiated given “dirt” it has dug up on Li’s past).</p><p>While we agree that there are some good takeaways from the short-seller report that may require further clarification from management, it is important to recognize and acknowledge that a lot of it might also be misleading – or in the words of Grizzly, “exaggerated”. This is also consistent with NIO’s stock performance during Tuesday and Wednesday’s session following release of the short-seller report. The stock has largely moved in consistency with the ongoing market rout, and broad-based selloff across the EV sector, with no extreme deviation due to the negative headline from Grizzly, which indicates that market participants, especially significant shareholders in NIO, are still digesting the latest external allegations.</p><p>At the end of the day, NIO remains one of the most viable EV businesses in the emerging sector, with continued demand for its vehicles to support further growth over the long-run. Unlike some of the upstarts in the increasingly competitive EV landscape that have been accused of fraud, such as Nikola (NKLA), Lordstown Motors (RIDE), and Faraday Future (FFIE), NIO already operates a global business with a substantiated vehicle order book to support the bulk of its top- and bottom-line expansion, which continues to support its positive valuation prospects ahead.</p><p>This article was written by Livy Investment Research</p></body></html>","source":"seekingalpha","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>NIO: Questions And Challenges To The Grizzly Short-Seller Report</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; 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}\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\">\nNIO: Questions And Challenges To The Grizzly Short-Seller Report\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-30 12:01 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4521053-nio-questions-and-challenges-to-the-grizzly-short-seller-report?source=content_type%3Areact%7Cfirst_level_url%3Ahome%7Csection%3Aportfolio%7Csection_asset%3Aheadlines%7Cline%3A2><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryShort-seller Grizzly Research has released a report outlining findings of alleged fraud by NIO on Tuesday evening.The report attempted to outline how NIO, through an unconsolidated entity, is ...</p>\n\n<a href=\"https://seekingalpha.com/article/4521053-nio-questions-and-challenges-to-the-grizzly-short-seller-report?source=content_type%3Areact%7Cfirst_level_url%3Ahome%7Csection%3Aportfolio%7Csection_asset%3Aheadlines%7Cline%3A2\">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","NIO.SI":"蔚来","09866":"蔚来-SW"},"source_url":"https://seekingalpha.com/article/4521053-nio-questions-and-challenges-to-the-grizzly-short-seller-report?source=content_type%3Areact%7Cfirst_level_url%3Ahome%7Csection%3Aportfolio%7Csection_asset%3Aheadlines%7Cline%3A2","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1121505043","content_text":"SummaryShort-seller Grizzly Research has released a report outlining findings of alleged fraud by NIO on Tuesday evening.The report attempted to outline how NIO, through an unconsolidated entity, is falsely inflating revenue and net income pertaining to its BaaS business.The report also accused CEO Bin Li of association with fraudulent activities in the past. The information was largely used as support for Grizzly's claims of financial manipulation at NIO.However, we believe some of the information reported by Grizzly have been exaggerated to support its short bias against NIO. We also question the validity of some of the quantified impacts that Grizzly is claiming against NIO's BaaS operations.Drew Angerer/Getty Images NewsGrizzly Research (\"Grizzly\") has released a short-seller report on NIO (NYSE:NIO) Tuesday morning, citing the Chinese electric vehicle (“EV”) company has engaged in the exaggeration of revenue and profitability via aggressive accounting methods and fraudulent means. In addition to outlining the allegedmeasures NIO has taken to falsely inflate its top- and bottom-line since 2020, Grizzly has also gathered extensive research in an attempt to character-assassinate NIO CEO Bin Li in order to “dot the i’s and cross the t’s” in its argument that the three core elements of fraud – opportunity, incentive and rationalization – exist in this situation for the EV maker.While some of the findings raised in the short-seller report may raise questions that only NIO management can answer, there are also questionable and groundless arguments made by Grizzly that could significantly mislead and deceive existing and potential investors in the EV stock. The following analysis will focus on an overview of the short-seller’s core claim against NIO – namely, false inflation of revenue and net income via aggressive accounting and potentially fraudulent means – and provide a walkthrough of questions / challenges we have over the validity of some of those claims.Accounting Crash Course: NIO’s BaaS Revenue Recognition MethodThrough publicly disclosed information within NIO’s audited annual report, Grizzly had identified that NIO is frontloading and inflating revenue recognition pertaining to its battery-as-a-service (“BaaS”) sales via an unconsolidated related party.In 2020, NIO, alongside an external consortium of investors that consist of EV battery maker CATL, Hubei Science Technology Investment Group, and a subsidiary of Fuotai Junan International Holdings Limited, have together created the joint venture “Wuhan Weineng Battery Asset Co., Ltd.,” (“Weineng”). Weineng was established in 2020, the same time when NIO’s battery lending service BaaS was introduced.Under BaaS, NIO customers are eligible for a one-time discount of up to RMB 128,000 ($19,133) on the vehicle purchase if they opt for the battery lending subscription program instead of buying the battery with the vehicle upfront. This strategy has been an effective mean in fuelling the adoption of NIO EVs in China, especially with additional government subsidies for purchases that are compatible with battery swapping technology. All sales and costs pertaining to BaaS are managed by Weineng.Now, the Weineng joint venture, in which NIO holds a 19.8% equity interest in, has been accounted for as an “equity-accounted investment” on the EV maker’s financial statements, given the definition of control under GAAP-based accounting has not been met (further discussed in later sections). Under GAAP-based accounting for related party transactions, “intragroup related party transactions and outstanding balances are eliminated, except for those between an investment entity and its subsidiaries measured at fair value through profit or loss, in the preparation of consolidated financial statements of the group”:GAAP Rules on Related Party Disclosures (IAS)Based on NIO’s disclosures within its audited annual report on its revenue recognition method pertaining to BaaS sales, the EV maker sells its battery packs to Weineng on a “back-to-back” basis when a vehicle is sold to a customer subscribed to BaaS:NIO Revenue Recognition Policy on BaaS Sales (NIO 2021 20F)In compliance with GAAP-based accounting for revenue recognition, a sale is reported to the income statement when a performance obligation is satisfied. Under NIO’s affiliation with Weineng, NIO sells Weineng a battery pack when a customer buys a vehicle with BaaS subscription. The performance obligation here is that NIO needs to provide a battery pack to Weineng, and once this is satisfied, NIO is permitted to recognize revenue on the battery sale based on a pre-contracted transaction price for the performance obligation. For NIO, the battery sold would have been previously considered as inventory. Following the recognition of the battery sale, NIO would have also recorded cost of sales pertaining to removing the battery from its inventory balance on the balance sheet:Journal Entries for Battery Sales Business Model (Author)In Weineng’s case, however, its performance obligation to customers is the provision of battery lending services on a monthly or annual basis, depending on the subscription option. As such, Weineng can only recognize monthly / annual BaaS revenue over time when it satisfies its battery lending obligation to customers. Weineng would also have to record depreciation costs over the useful life of its batteries, which are considered property, plant and equipment used in facilitating its service business:Journal Entries for BaaS Business Model (Author)This arrangement essentially allows NIO to recognize 100% of revenues pertaining to the battery pack sold to Weineng upfront upon selling a vehicle booked on BaaS on a one-for-one basis, instead of recognizing BaaS revenue and related depreciation costs on the batteries used in the BaaS business over time. The disclosed BaaS revenue recognition method for NIO also infers that the number of battery packs sold to Weineng should be equivalent to the number of BaaS subscribers as of period-end. BaaS revenues and related costs of sales (e.g. depreciation costs on batteries) recognized over time are instead in the books of Weineng, in which NIO accounts for on its balance sheet as an equity-accounted investment.Because Weineng is an equity-accounted investment and not a consolidated entity in which NIO controls under the definition set out by GAAP-based accounting, NIO is not required to perform intragroup eliminations pertaining to the related party transaction. Instead, it is required to disclose the relationship, as well as the related amounts if material. This information is disclosed in NIO’s 2021 20 Funder “Note 26. Related Party Balances and Transactions”. Revenue and income generated by Weineng are accounted for in NIO’s financial statements as “share of (loss) / income of equity investees” pro-rated for its non-controlling interest.Grizzly’s Core Short ThesisGrizzly alleges the move is a fraudulent measure taken by NIO to “exaggerate revenue and profitability”. The short-seller has accused NIO of using the accounting “loophole” to frontload battery revenues pertaining to BaaS that should have been recognized over a course of about seven years (i.e. battery discount on BaaS vehicle purchase, divided by annual BaaS subscription fee).In addition to frontloading revenue recognition on BaaS sales, Grizzly has also identified a discrepancy between the number of active BaaS subscribers and battery packs owned by Weineng as of September 30, 2021. Grizzly found thatWeineng had ownership of 40,053 battery packs as of September 30, 2021, but only had 19,000 active BaaS subscribers during the period, which is inconsistent with NIO’s claims that it only records battery sales to Weineng on a back-to-back basis with BaaS vehicle sales. Grizzly has attributed the discrepancy as NIO’s way of artificially inflating revenues by selling more battery packs to Weineng than it needs to fulfil BaaS performance obligations.In order to support its claim that NIO is defrauding investors via the unconsolidated related party, Grizzly has also gathered additional research in an attempt to support the three key elements of the fraudulent triangle:Opportunity:As mentioned in the accounting overview section, the ownership structure between NIO and Weineng is accounted for as an equity-accounted investment, which allows NIO to bypass related party transaction eliminations on its financial statements. This accordingly provides an opportunity for NIO to artificially inflate its revenues at the group level by recording sales to the equity-accounted subsidiary, without the need to back it out at period end. Under GAAP-based accounting rules on related party transactions, NIO is required to disclose material details to the relationship, in which it has complied with.The organizational structure also provides NIO an ability to recognize BaaS revenues upfront, instead of over an extended period of time given the difference in performance obligation it owes toWeinengcompared to thoseWeineng owes to BaaS subscribers. Grizzly also claims the method has allowed NIO to bypass depreciation costs on battery assets to the tune of RMB 336 million per year.Incentive:Grizzly has gone through extensive measures to dig up evidence to support NIO has a valid incentive for exaggerating its revenue and profitability. Citing an agreement between NIO and a state-backed consortium which has invested in a wholly-owned subsidiary “NIO China”, which requires NIO to redeem the investment upon failure in meeting pre-established performance metrics, such as achieving revenues of RMB 120 billion by 2024. However, the publicly disclosed information per NIO’s regulatory filings does not specify whether the RMB 120 billion revenue performance metric is required on an annual basis or on a cumulative basis between the time at which the agreement was forged with the state-backed investment consortium and 2024.Grizzly has also inferred incentive for NIO to exaggerate its top- and bottom-line as a mean to pretty its valuation prospects, and attract investors from the public market.Rationalization:The short-seller report lacks support for how NIO tried to rationalize the alleged fraudulent reporting behaviour. However, Grizzly has proceeded to gather evidence to bolster its claim of why the likelihood of fraud at NIO is high. These include findings about NIO CEO Li’s past association with personnel that have been previously linked to high-profile fraudulent financial reporting cases like Luckin Coffee(OTCPK:LKNCY). Grizzly has also alluded to questionable behaviour by NIO CEO Li, such as pledging a NIO-affiliated subsidiary, “NIO User Trust”, in which Li personally controls to UBS AG without directly addressing the matter to shareholders. While these findings may warrant clarification from management, there is insufficient ground to warrant a fraudulent sentence to the company.NIO management has also refuted Grizzly’s claims, saying allegations outlined in the report are “without merit and contains numerous errors, unsupported speculations and misleading conclusions and interpretations”, and has committed to bolstering public disclosures going forward to protect shareholders’ interests. Nowhere has the company tried to outright rationalize fraudulent reporting.Challenging Grizzly’s Conclusion on “Control” Established by NIO Over WeinengIn addition to character assassination on Li to support its claims for fraudulent reporting behaviour at NIO, Grizzly has also attempted to conclude NIO’s control over Weineng. As mentioned in earlier sections, if NIO effectively “controls” Weineng, it would have to consolidate the investment and eliminate any earnings recorded via related party transactions.First, Grizzly has identified “conflicting disclosure” between NIO’s claim that it has “significant influence” over Weineng in one place, and NIO’s claim that it only has “limited control over the business operations” ofWeinengin another place within a same regulatory filing. However, the words “significant influence” and “control” used within NIO’s regulatory filings are defined differently under GAAP-based accounting rules from general definitions of power that everyday investors are familiar with.Significant influence is defined as “the power to participate in the financial and operating policy decisions of the investee without the power to control or jointly control those policies” under GAAP-based accounting. Significantly influence is typically established when an “entity holds, directly or indirectly, 20% or more of voting power of the investee”. NIO’s 19.8% equity interest in Weineng is sufficient to presume its “significant influence” over the investment:GAAP Rules on Investments in Associates and Joint Ventures (IAS)Pointing to our earlier reference to the definition of control established in GAAP-based accounting, the acquiring party only establishes “control” over the acquired party if it demonstrates three primary elements:1. “Power” over the acquired entity, which is defined under GAAP as a substantive right exercised by an acquirer over the acquiree for non-protective benefits (e.g. exercising rights without the need for breach of contract or majority investor support). Based on publicly disclosed information in NIO’s regulatory filings, it only holds one of nine board seats on Weineng. There is also no mention of voting agreements that would pass on majority board and/or owner voting rights to NIO. With one of nine board seats, and a 19.8% equity interest, NIO does not exhibit power over Weineng to establish control.2. Exposure tovariable returnsfrom the acquiree based on the acquirer’s involvement. NIO does not generate additional fees from Weineng based on Weineng’s performance. NIO is only exposed to Weineng’s earnings through its equity-accounted share of the investment.As for the acquirer’s involvement in interfering with returns generated from the acquiree, Grizzly has pointed to the installation of two existing NIO executives to Weineng in management roles that include “Legal Representative and Chairman” and “General Manager and Director”. However, considering NIO’s significant influence over Weineng as defined under GAAP rules explained earlier, it is not unusual for the two parties to share employees or for NIO to “participate in the financial and operating policy decisions” of Weineng through the two shared employees. As such, NIO can account for its investment inWeinengas an equity-accounted investment, as long as “control” is not established even if it has installed employees at Weineng. Based on NIO’s failure to meet criterion 1 “power”, it already fails to establish control under GAAP rules over Weineng based on the existing ownership and voting structure disclosed in regulatory filings.Grizzly has also alluded to the installation of two NIO executives in the daily operations of Weineng as a “major conflict of interest”. However, the auditor’s report per NIO’s audited 2021 20F states that “the company has maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established inInternal Control – Integrated Framework(2013) issued by the COSO”. The COSO framework requires that internal controls address segregation of duty requirements to ensure fair presentation of financial information without material misstatements whether due to error or fraud. As such, it is reasonable to believe that segregation of duty controls in place pertaining to the two executives’ roles in both NIO and Weineng have been tested as effective as of the reporting date.3. The acquiring party is aprincipalin the transaction, and not an agent. Under GAAP-based accounting, an agent is “primarily engaged to act on behalf and for the benefit of another party…[and] does not control an investee when it exercises decision-making rights delegated to it”. In determining whether NIO is an agent over Weineng, the i) scope of NIO’s decision-making authority over Weineng, ii) the rights held by other investors in Weineng, iii) the remuneration in which NIO is entitled to in its affiliation with Weineng, and iv) NIO’s exposure to variability of returns from its interest in Weineng must be considered:Based on the foregoing analysis, we know that NIO’s sole decision-making authority over Weineng is limited given it only holds 19.8% equity interest with one in nine board seats in the joint venture. The two NIO executives installed in the daily operations of Weineng also do not exhibit characteristics of sole control over the joint ventures’ business.The remainder of the investment consortium over Weineng holds the remaining eight of nine board seats, and 80.2% equity interest in the joint venture. There have also been no mention of signed-over voting rights by the investment consortium to NIO in publicly disclosed information that would give NIO control over Weineng.In addition to battery sales, NIO is also entitled to service revenue earned from Weineng through service agreements. NIO earns revenue for providing “battery packmonitoring, maintenance, upgrade, replacement, IT system support, etc.” to Weineng via monthly service charges. As of the reporting year ended December 31, 2021, service revenues pertaining to the service agreements between NIO and Weineng were immaterial according to disclosures in “Note 2. Summary of Significant Accounting Policies”, section(r) Revenue recognitionin the 2021 20F.As discussed in the control assessment under criterion 2, NIO’s exposure to variability of returns in its investment in Weineng is insufficient to establish control under GAAP-based accounting.Challenging Grizzly’s Quantification of NIO’s Alleged Revenue and Profit InflationGrizzly believes NIO has inflated revenue and net income by “about 10% and 95%, respectively”, via its affiliation with Weineng. Grizzly’s calculations, as well as our skepticism, is outlined as follows:1. Frontloaded Revenue via Battery Sales to WeinengGrizzly’s accusation.As discussed in the foregoing analysis, Grizzly identified that NIO has been recognizing battery revenues pertaining to BaaS upfront via its affiliation with Weineng. Instead of recognizing BaaS revenues over time when the service performance obligation is satisfied, NIO is able to recognize 100% of battery revenues sold to customers via BaaS subscriptions through the Weineng JV. Grizzly claims that this arrangement effectively allows NIO to pull forward seven years of BaaS revenue upfront.Grizzly’s calculation of quantified impacts.Considering vehicle purchase discounts ranging RMB 70,000 (70/75 kWh battery pack) to RMB 128,000 (100 kWh battery pack) upon buyer’s subscription to BaaS, Grizzly has taken the lower end of the range (i.e. RMB 70,000) as the proxy for battery pack revenues. Based on annual BaaS subscription fees at RMB 11,760 (RMB 980/mo.) for the 70 kWh battery pack, which yields a vehicle discount of RMB 70,000 with subscription to BaaS, Grizzly has assumed a BaaS revenue recognition timeline of about seven years (i.e. RMB 70,000 discount, divided by RMB 11,760 annual BaaS subscription fee, adjusted for inflation) – we consider this a reasonable assumption.Now, as of September 30, 2021, a public regulatory filing by Weineng disclosed that it had 19,000 active BaaS subscribers. 18% of its subscription base were subscribed to the RMB 1,480/mo. 100 kWh battery pack, and 82% were subscribed to the RMB 980/mo. 70/75 kWh battery pack at the time.Grizzly’s calculation of inflated revenues and income pertaining to NIO’s sale of 19,000 BaaS-related batteries to Weineng in the nine months ending September 30, 2021 is as follows:Grizzly's Computation of Inflated Revenue and Income Pertaining to Pulled Forward BaaS Sales (Grizzly Research)As of the nine months ended September 30, 2021, NIO had generated RMB 2,796 million in revenues from the sale of batteries to Weineng (full year 2021 revenues generated from Weineng: RMB 4,138 million, 11% of total NIO 2021 revenue). Based on 19,000 active BaaS subscribers, and ownership of 40,053 battery packs owned as reported by Weineng as of September 30, 2021, Grizzly estimates that only 47% of the RMB 2,796 million in revenues generated from the sale of goods to Weineng are related to “real” BaaS sales. Essentially, Grizzly claims only RMB 1,326 million of RMB 2,796 million in sales of goods to Weineng recognized on NIO’s income statement in the nine months ended September 30, 2021 are related to real BaaS battery sales.The RMB 1,326 million pertaining to 19,000 battery packs sold to Weineng for the number of active BaaS subscribers at the time is effectively the “upfront” revenue recognized by NIO, which should have been recognized over a course of seven years instead based on the estimated performance obligation timeline discussed in earlier sections. Without Weineng, NIO would have instead had to recognize BaaS revenues related to the 19,000 subscribers over time, which is equivalent to RMB 179 million in the nine month period ending September 30, 2021. This essentially means NIO had allegedly pulled forward RMB 1,147 million in revenues related to BaaS sales in the nine months ending September 30, 2021.In the nine months ended September 30, 2021, NIO had reported total revenue of RMB 26,236 million and net losses of RMB 1,874 million. The RMB 1,147 million in pulled forward BaaS revenues represents 4% of total revenues recognized over the nine-month reporting period.To generate the “adjusted” net income that NIO would have reported had Weineng never existed, Grizzly had removed RMB 1,147 million in pulled forward revenues pertaining to BaaS sales directly from actual reported net losses of RMB 1,874 million. This accordingly yields adjusted net losses of RMB 3,021 million for the nine months ending September 30, 2021 at NIO, or a variance of 61%.Issue with Grizzly’s claim.In Grizzly’s calculation of adjusted net losses had BaaS revenue never been pulled forward at NIO via its affiliation with Weineng, the short-seller did not add back costs of sales that NIO would have recognized when it sold the battery packs to Weineng and recorded the related revenue.While profit margins on NIO’s battery pack sales to Weineng are not disclosed, Grizzly had used 20% as a proxy, which is “consistent with the margin of an entire vehicle [considering] batteries are a cost center for all vehicles”. Using the 20% profit margin proxy on 19,000 battery pack sales to Weineng totalling RMB 1,326 million in the nine months ending September 30, 2021, NIO would have recorded related cost of sales of RMB 1,060.9 million (i.e. 0.8% cost of revenues x RMB 1,326 million battery revenues recorded on the sale of 19,000 units to Weineng in the nine months ending September 30, 2021).When Grizzly removed/pulled forward BaaS revenues of RMB 1,147 million from NIO’s actual net losses of RMB 1,874 million reported in the nine months ending September 30, 2021, Grizzly should have also added back related cost of sales totalling RMB 917.6 million in determining the adjusted net income reported.Livy’s revised calculation of quantified impacts.Livy's Computation of Revenue and Income Variances Pertaining to NIO's Alleged Frontloading of BaaS Sales (Author)The above revised net income adjustment backs out alleged pulled forward BaaS revenues by NIO through its affiliation with Weineng from actual net losses reported by NIO in the nine months ending September 30, 2021. The orange-highlighted cells represent the incremental cost of sales pertaining to pulled forward BaaS revenues that should have been added back to adjusted net income in order to represent a fair representation of NIO’s adjusted net losses for the nine months ending September 30, 2021 if Weineng never existed and the EV maker had to recognize BaaS revenues over time. This adjustment accordingly reduces the variance of 61% from Grizzly’s calculation of adjusted net losses, to 12% – a material difference that, like Grizzly is accusing NIO of doing, misleads investors on the matter discussed.2. Revenues from Oversupplied Batteries to WeinengGrizzly’s accusation.Based on NIO’s revenue recognition method on BaaS sales, the number of battery packs sold to Weineng should be equivalent to the number of vehicle buyers that have subscribed to BaaS at the time of purchase. Based on 19,000 active BaaS subscribers reported by Weineng as of September 30, 2021, it is easy to assume that NIO should have only sold 19,000 battery packs to Weineng in the nine months ending September 30, 2021 as well to comply with the EV maker’s revenue recognition method on BaaS sales outlined in its 2021 20F.However, Weineng had reported ownership of 40,053 battery packs as of September 30, 2021, which exceeds its active subscriber base of 19,000 by 21,053 units. As such, Grizzly has accused NIO of intentionally overselling battery packs to Weineng to inflate revenues.While the discrepancy is indeed a question for management, Grizzly had cited that there is no need for Weineng to hold that many additional battery packs, even for operational purposes. Grizzly had gone on to explain its field work done at NIO Power Swap stations to verify that there is no difference between BaaS battery packs owned by Weineng and battery packs used in swap stations owned by NIO. However, we believe the additional field work is a moot point, considering NIO Power Swap operations are not related to Weineng. Weineng only facilitates NIO’s BaaS battery lending business, and nothing else – Grizzly did not even have to go out of its way to check on NIO’s Power Swap stations and hold conversations with sales staff at NIO’s car centers.Livy’s response.While the number of battery packs owned by Weineng should essentially be equivalent to the number of active BaaS subscribers, there is a possibility that a total of 40,053 NIO vehicle sales between 2020 when BaaS was established and September 30, 2021 had subscribed to BaaS. Perhaps, as of reporting date on September 30, 2021, there were 21,053 BaaS subscribers that have halted monthly subscriptions, which is not surprising given the third quarter is not a typical driving season, and there is a possibility that these NIO vehicle owners did not need to use their vehicles during the period.Grizzly has also supported its claim that NIO oversupplied battery packs to Weineng to intentionally inflate revenues by saying that Weineng has no storage facility to store its 21,053 excess battery packs as of September 30, 2021. However, we do not find this surprising, as BaaS subscribers that have halted monthly subscriptions might be holding onto the emptied battery packs on consignment or have returned them to a NIO servicing center where NIO has held onto these Weineng-owned battery packs on consignment. The lack of battery pack storage facility owned by Weineng does not conclude that its ownership of the excess battery packs is fraudulent and made up.There can be many reasons why a discrepancy exists between the number of active BaaS subscribers and battery packs owned by Weineng at the end of a reporting period. The above are just two assumptions that could invalidate Grizzly’s accusation (which is also an assumption). The real answer to the discrepancy can only be explained by NIO and Weineng management.Grizzly’s calculation of quantified impacts.In determining the inflated revenue and earnings specific to the allegedly oversupplied battery packs from NIO to Weineng, Grizzly had performed the following calculations:Grizzly's Computation of Revenue and Net Income Variances Pertaining to Oversupplied Batteries (Grizzly Research)In deriving the inflated revenues related to the allegedly oversupplied battery packs, Grizzly had determined the percentage of battery packs owned by Weineng as of September 30, 2021 that were in excess to its active subscriber base as 53% (i.e. 21,053 excess battery packs, divided by 40,053 battery packs owned by Weineng as of September 30, 2021). The percentage was applied to total revenue recognized by NIO pertaining to the sale of battery packs to Weineng in the nine months ending September 30, 2021, resulting in oversold battery revenues of RMB 1,470 million (i.e. 53% oversold batteries x RMB 2,796 million in related party revenues from Weineng recorded by NIO for the nine months ending September 30, 2021).In the nine months ended September 30, 2021, NIO had reported total revenue of RMB 26,236 million and net losses of RMB 1,874 million. The RMB 1,470 million in oversold battery revenue represents 6% of total NIO revenues recognized over the nine-month reporting period.Considering Grizzly’s 20% profit margin assumption on battery pack sales as discussed in earlier sections, the oversold battery packs to Weineng would have generated net income of RMB 294 million in the nine months ending September 30, 2021. As such, backing out RMB 294 million in overstated profits back to NIO’s actual reported net losses of RMB 1,874 million in the nine-month period ending September 30, 2021 would have yield adjusted net losses of RMB 2,168 million, representing a variance of 16%.We have no issues with this calculation performed by Grizzly, other than concerns over the short-seller’s claims that these 20,053 battery packs were intentionally “oversold” by NIO to Weineng to artificially boost revenues.3. Shifting Depreciation CostsGrizzly’s Accusations.Grizzly has accused NIO of indirectly shifting depreciation costs on the battery packs sold to Weineng, saving the EV maker north of RMB 336 million in depreciation expense on an annual basis.Specifically, Grizzly has assumed a 20% profit margin on NIO’s battery sales totalling RMB 2,796 million generated from Weineng in the nine months ending September 30, 2021. This represents battery assets valued at a cost basis of RMB 2.25 billion (i.e. 80% cost x RMB 2,796 in battery sales to Weineng, adjusted for minor rounding differences) removed from the EV maker’s balance sheet over the same period.Based on the five to eight years useful life attributable to equipment, including battery packs, used in NIO’s Power Swap business as disclosed in its 2021 20F, Grizzly has assumed an annual depreciation rate of about 15% on the battery packs sold to Weineng and removed from NIO’s balance sheet in the nine months ending September 30, 2021. This is consistent with the assumed BaaS revenue recognition timeline of about seven years as discussed in earlier sections. As such, Grizzly has accused NIO of avoiding depreciation costs of RMB 336 million (i.e. 15% battery depreciation rate x RMB 2,796 million in battery pack sales to Weineng) in the nine months ending September 30, 2021. The short-seller has also alluded to the RMB 336 million as a proxy for annual depreciation costs that NIO has avoided via its arrangement with Weineng.Issue with Grizzly’s claim.There are two folds to this situation:1. BaaS Business Model:Under the BaaS business model, the battery packs are considered equipment used in facilitating a service business. As such, the related battery packs would be subjected to depreciation over its useful life. In NIO’s case, if Weineng never existed and the EV maker consolidates its BaaS business, NIO would have had to recognized BaaS revenues pertaining to the 19,000 battery packs that Grizzly has attributed to the BaaS business over seven years, and accordingly record depreciation costs on these battery packs as well over their useful lives of about seven years. As mentioned in earlier sections, the related journal entries under the BaaS business model is as follows:Journal Entries for BaaS Business Model (Author)2. Battery Sales Business Model:in the current situation where NIO has sold the battery packs to Weineng, the battery packs are considered inventory to NIO. There is no depreciation costs related to inventory under GAAP-based accounting. Instead, NIO needs to record the costs of this inventory when they are removed from its balance sheet once the sale is recognized. As mentioned in earlier sections, the related journal entries under the battery sale business model is as follows:Journal Entries for Battery Sales Business Model (Author)Now, in NIO’s current actual situation, it is engaged in a battery sales business model under its performance obligation to Weineng, while Weineng is engaged in a BaaS business model under its performance obligation to BaaS subscribers.As discussed in our first challenge to Grizzly’s calculations pertaining to pulled forward revenue on BaaS battery sales to Weineng, NIO would have recorded costs of sales pertaining to the sold battery inventory when it recognized the related revenues. And this cost of sales number, based on a 20% profit margin assumption consistent with that used by Grizzly, would have accounted for the costs of battery inventory removed from NIO’s balance sheet upon completion of the sale to Weineng. This is consistent with Grizzly’s own calculation pertaining to profit margins on the battery packs that it alleges NIO had oversupplied to Weineng, which is inclusive of cost of sales related to written off inventory incurred by NIO upon recognition of related revenues.If NIO was engaged in the BaaS business model itself, without the intervention of Weineng, it would have recognized depreciation at a rate of 15% per year on the battery packs. However, under the upfront sale of related battery packs to Weineng, NIO would have recorded related cost of sales at an upfront rate of 80% as well. So basically, instead of recording revenues and depreciation costs on battery packs over time, NIO essentially recorded revenues and battery inventory costs upfront under its current arrangement with Weineng.Grizzly’s calculation of quantified impacts.Grizzly’s accusation that NIO has overstated revenues and earnings by 10% and 95%, respectively, through its affiliation with Weineng is calculated as follows:Grizzly's Computation of Total Revenue and Income Inflation (Grizzly Research)As discussed in earlier sections, NIO’s pulled forward BaaS revenues and inflated battery sales revenues via its affiliation with Weineng represent 4% and 6% of its total revenues, respectively, recognized in the nine months ending September 30, 2021. This represents the 10% in inflated NIO revenues as Grizzly has outlined in the above calculation.Livy’s revised calculation of quantified impacts.While we have yet to reconcile the RMB 1,777 million in total inflated net income that Grizzly has accused NIO of recognizing (please let us know in comments if you know), we believe the 95% variance identified by Grizzly is not a fair presentation of the quantified impact of its core short thesis.Our calculation of the quantified impact pertaining to Grizzly’s accusations that NIO has inflated revenue and earnings through (1) pulling forward BaaS sales, and (2) oversupplying batteries to Weineng, is as follows:Livy's Computation of Alleged Overstatements Related to Alleged Frontloading of BaaS Revenue (Author)Livy's Computation of Alleged Overstatements Pertaining to Alleged Overselling of Battery Supplies (Author)Livy's Computation of Alleged Revenue Overstatement (Author)Livy's Computation of Alleged Overstatement in Net Income (Author)Under Grizzly’s accusations of inflated revenue and earnings by NIO through its affiliation with Weineng, if found valid (which we remain skeptical of), NIO would have overstated net losses in the nine months ending September 30, 2021 by 28% instead of the 95% that Grizzly alleges – a material difference that again misleads investors on the estimated quantified impact pertaining to the accusations claimed by the short-seller. The net income variance of RMB 523 million ($78 million) found in our calculation is also immaterial (< 1%) based on NIO’s market value of $58.38 billion as of September 30, 2021 and NIO’s market value of approximately $35 billion today.Final ThoughtsAs discussed in the introduction of this analysis, Grizzly had also touched on things like NIO CEO Li’s association with fraudulent personnel, the pledge of NIO User Trust to UBS AG, and conflict of interests to further support its argument that NIO is engaged in fraudulent financial reporting. However, these are groundless allegations that have yet to be substantiated to infer Li is committing fraud via NIO’s operations. While investors should always exercise professional skepticism on publicly disclosed information in regulatory filings when making investment decisions, the same skepticism should also be placed on external claims – such as those by the short-seller, commentary by external sources, and/or even commentary herein – especially if they argue that correlation = causation (e.g. Grizzly’s method in inferring that fraud at NIO is substantiated given “dirt” it has dug up on Li’s past).While we agree that there are some good takeaways from the short-seller report that may require further clarification from management, it is important to recognize and acknowledge that a lot of it might also be misleading – or in the words of Grizzly, “exaggerated”. This is also consistent with NIO’s stock performance during Tuesday and Wednesday’s session following release of the short-seller report. The stock has largely moved in consistency with the ongoing market rout, and broad-based selloff across the EV sector, with no extreme deviation due to the negative headline from Grizzly, which indicates that market participants, especially significant shareholders in NIO, are still digesting the latest external allegations.At the end of the day, NIO remains one of the most viable EV businesses in the emerging sector, with continued demand for its vehicles to support further growth over the long-run. Unlike some of the upstarts in the increasingly competitive EV landscape that have been accused of fraud, such as Nikola (NKLA), Lordstown Motors (RIDE), and Faraday Future (FFIE), NIO already operates a global business with a substantiated vehicle order book to support the bulk of its top- and bottom-line expansion, which continues to support its positive valuation prospects ahead.This article was written by Livy Investment Research","news_type":1},"isVote":1,"tweetType":1,"viewCount":310,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3585983433962847","authorId":"3585983433962847","name":"tanpp2307","avatar":"https://static.tigerbbs.com/b4cb1adebe779f631f65a6b4332f7bc5","crmLevel":5,"crmLevelSwitch":0,"authorIdStr":"3585983433962847","idStr":"3585983433962847"},"content":"Agree absolutely! If they are so noble in wanting to protect retail investors, they themselves should not short the stock prior to releasing the so call report!","text":"Agree absolutely! If they are so noble in wanting to protect retail investors, they themselves should not short the stock prior to releasing the so call report!","html":"Agree absolutely! If they are so noble in wanting to protect retail investors, they themselves should not short the stock prior to releasing the so call report!"}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9052926557,"gmtCreate":1655112415479,"gmtModify":1676535563851,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"authorIdStr":"4101449357353590","idStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/SOFI\">$SoFi Technologies Inc.(SOFI)$</a>Keeps dropping..looking to DCA when it&nbsp;dips&nbsp;below $5 this week","listText":"<a href=\"https://ttm.financial/S/SOFI\">$SoFi Technologies Inc.(SOFI)$</a>Keeps dropping..looking to DCA when it&nbsp;dips&nbsp;below $5 this week","text":"$SoFi Technologies Inc.(SOFI)$Keeps dropping..looking to DCA when it dips below $5 this week","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9052926557","isVote":1,"tweetType":1,"viewCount":158,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9053763805,"gmtCreate":1654590660207,"gmtModify":1676535474707,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"authorIdStr":"4101449357353590","idStr":"4101449357353590"},"themes":[],"htmlText":"Is It worth a shot to buy Didi now?","listText":"Is It worth a shot to buy Didi now?","text":"Is It worth a shot to buy Didi now?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9053763805","repostId":"1127692441","repostType":2,"repost":{"id":"1127692441","kind":"news","weMediaInfo":{"introduction":"Providing stock market headlines, business news, financials and earnings ","home_visible":1,"media_name":"Tiger Newspress","id":"1079075236","head_image":"https://static.tigerbbs.com/8274c5b9d4c2852bfb1c4d6ce16c68ba"},"pubTimestamp":1654589849,"share":"https://ttm.financial/m/news/1127692441?lang=&edition=fundamental","pubTime":"2022-06-07 16:17","market":"us","language":"en","title":"DiDi Stock Jumps Over 6% in Premarket Trading","url":"https://stock-news.laohu8.com/highlight/detail?id=1127692441","media":"Tiger Newspress","summary":"DiDi Stock Jumps Over 6% in Premarket Trading.","content":"<html><head></head><body><p>DiDi Stock Jumps Over 6% in Premarket Trading. <img src=\"https://static.tigerbbs.com/8bd566a182c77d24456524e0aa9b72cb\" tg-width=\"816\" tg-height=\"666\" width=\"100%\" height=\"auto\"/></p></body></html>","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>DiDi Stock Jumps Over 6% in Premarket Trading</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; 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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\">\nDiDi Stock Jumps Over 6% in Premarket Trading\n</h2>\n\n<h4 class=\"meta\">\n\n\n<a class=\"head\" href=\"https://laohu8.com/wemedia/1079075236\">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/8274c5b9d4c2852bfb1c4d6ce16c68ba);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Tiger Newspress </p>\n<p class=\"h-time\">2022-06-07 16:17</p>\n</div>\n\n</a>\n\n\n</h4>\n\n</header>\n<article>\n<html><head></head><body><p>DiDi Stock Jumps Over 6% in Premarket Trading. <img src=\"https://static.tigerbbs.com/8bd566a182c77d24456524e0aa9b72cb\" tg-width=\"816\" tg-height=\"666\" width=\"100%\" height=\"auto\"/></p></body></html>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"DIDIY":"DiDi Global Inc.","DIDI":"滴滴(已退市)"},"source_url":"","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1127692441","content_text":"DiDi Stock Jumps Over 6% in Premarket Trading.","news_type":1},"isVote":1,"tweetType":1,"viewCount":482,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9059951529,"gmtCreate":1654297913961,"gmtModify":1676535425568,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"authorIdStr":"4101449357353590","idStr":"4101449357353590"},"themes":[],"htmlText":"Good read","listText":"Good read","text":"Good read","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059951529","repostId":"2240272383","repostType":2,"repost":{"id":"2240272383","kind":"highlight","pubTimestamp":1654286714,"share":"https://ttm.financial/m/news/2240272383?lang=&edition=fundamental","pubTime":"2022-06-04 04:05","market":"us","language":"en","title":"Micron Controls 55% Of Automotive Semiconductor Memory Market","url":"https://stock-news.laohu8.com/highlight/detail?id=2240272383","media":"seekingalpha","summary":"Say-Cheese/iStock via Getty Images Micron Technology (NASDAQ:MU) shares fell Friday, June 3 as inves","content":"<html><body><p><figure><picture><img height=\"1057px\" sizes=\"(max-width: 768px) calc(100vw - 36px), (max-width: 1024px) calc(100vw - 132px), (max-width: 1200px) calc(66.6vw - 72px), 600px\" src=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1179848360/image_1179848360.jpg?io=getty-c-w750\" srcset=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1179848360/image_1179848360.jpg?io=getty-c-w1536 1536w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1179848360/image_1179848360.jpg?io=getty-c-w1280 1280w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1179848360/image_1179848360.jpg?io=getty-c-w1080 1080w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1179848360/image_1179848360.jpg?io=getty-c-w750 750w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1179848360/image_1179848360.jpg?io=getty-c-w640 640w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1179848360/image_1179848360.jpg?io=getty-c-w480 480w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1179848360/image_1179848360.jpg?io=getty-c-w320 320w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/1179848360/image_1179848360.jpg?io=getty-c-w240 240w\" width=\"1536px\"/></picture><figcaption><p>Say-Cheese/iStock via Getty Images</p></figcaption></figure></p> <p>Micron Technology (<span>NASDAQ:MU</span>) shares fell Friday, June 3 as investment firm Piper Sandler downgraded the memory chipmaker, citing its \"oversized exposure\" to consumer electronics.</p> <p>With Micron in the spotlight, other bellwether semiconductor companies also were negatively<span> impacted. Intel (</span>INTC<span>) was off by 2.6% while Nvidia (</span>NVDA<span>) was down by 4.5%, Qualcomm (</span>QCOM<span>) shares fell by 3.5% and Advanced Micro Devices (</span><a href=\"https://laohu8.com/S/AMD\">AMD</a><span>) dropped 3%.</span></p> <p>According to the Tech Note in Seeking Alpha:</p> <ul><li>Micron is also not as exposed to the automotive market, which Kumar said events like rising rates, a slowing macro and the possibility of excess inventory may be a concern.</li></ul> <ul><li>Kumar pointed out that Micron's exposure of greater than 50% to consumer markets is higher than many other semiconductor companies, and with some weakness in the mobile and PC markets, it's likely there could be \"additional pressure on the company.\"</li></ul> <h2><strong>My Analysis</strong></h2> <p>Perhaps it's in the definitions of the Piper Sandler database used to downgrade Micron. But my analysis shows significantly different metrics, which is shown below in this article.</p> <h4>Automotive Memory</h4> <p>Shown in Chart 1, Micron's share of the total Automotive Memory market of $3,700 million was 55.0% in 2021, up slightly from 53.9% in 2020, according to The Information Network's report entitled \"<strong><em>Hot ICs: A Market Analysis of Artificial Intelligence (\"AI\"), 5G, Automotive, and Memory Chips</em></strong>.\"</p> <p>Chart 1</p> <p><figure contenteditable=\"false\"><picture><span><img contenteditable=\"true\" height=\"465\" hspace=\"6\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/6/3/7008-16542781457127938.png\" vspace=\"6\" width=\"640\"/></span></picture><figcaption><p>The Information Network</p></figcaption></figure></p> <h4>Automotive Semiconductor</h4> <p>Chart 2 shows that Micron's share of the total Automotive Semiconductor Market of $51,600 million was 3.9%, up slightly from 3.4% in 2020.</p> <p>Chart 2</p> <p><figure contenteditable=\"false\"><picture><span><img contenteditable=\"true\" height=\"465\" hspace=\"6\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/6/3/7008-16542781884709053.png\" vspace=\"6\" width=\"640\"/></span></picture><figcaption><p><span><span>The Information Network</span></span></p></figcaption></figure></p> <h4>Consumer Semiconductor</h4> <p>Chart 3 shows Micron's share of the global Consumer Semiconductor market of $46,800 million was 2.5% in 2021, down slightly from 2.8% in 2020.</p> <p>Note that my analysis of the \"Consumer\" segment is based on Industry Consortia \"Semiconductor Industry Association\" definitions.</p> <p>Chart 3</p> <p><figure contenteditable=\"false\"><picture><span><img contenteditable=\"true\" height=\"465\" hspace=\"6\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/6/3/7008-16542782551973054.png\" vspace=\"6\" width=\"640\"/></span></picture><figcaption><p>The Information Network</p></figcaption></figure></p> <h4>Smartphone Semiconductor</h4> <p>Chart 4 shows Micron's share of the global Smartphone Semiconductor market of $88,100 million was 8.2% in 2021, down from 10.3% in 2020.</p> <p>Chart 4</p> <p><figure contenteditable=\"false\"><picture><span><img contenteditable=\"true\" height=\"465\" hspace=\"6\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/6/3/7008-16542783075977776.png\" vspace=\"6\" width=\"640\"/></span></picture><figcaption><p>The Information Network</p></figcaption></figure></p> <h2>Investor Takeaway</h2> <p>The Piper Sandler analysis states that Micron's exposure was greater than 50% of consumer markets. My analysis shows that it is just 2.5% of the $46 billion consumer semiconductor (Chart 3) and 8% of the $88 billion smartphone semiconductor markets (Chart 4). These shares are significantly below the 50% share reported by Piper Sandler.</p> <p>In the Automotive semiconductor market, Piper Sandler reports that Micron is also not as exposed to the automotive market. In my analysis, Micron has a 55% share of the $3.7 billion market (Chart 1), which in my opinion, is significantly more than \"not as exposed.\" Indeed, if we consider the overall Automotive Semiconductor market, Micron does have just a 3.9% share of the $52 billion market.</p> <p>Investors must consider that Micron's automotive share of total revenues is 7% compared to semiconductor manufacturers that specialize in the automotive market, such as NXP Semiconductors (NXPI) with a 47% exposure, or Infineon with a 46% exposure.</p> <p>I rate Micron a buy. My analysis also correlates with Seeking Alpha's Ratings and Factor Grades shown in Chart 5.</p> <p>Chart 5</p> <p><figure contenteditable=\"false\"><picture><img contenteditable=\"true\" height=\"844\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2022/6/3/7008-1654278544854768.png\" width=\"596\"/></picture><figcaption><p>Seeking Alpha</p></figcaption></figure></p></body></html>","source":"seekingalpha","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>Micron Controls 55% Of Automotive Semiconductor Memory Market</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\">\nMicron Controls 55% Of Automotive Semiconductor Memory Market\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-04 04:05 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4516350-micron-controls-55-percent-of-automotive-semiconductor-memory-market><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Say-Cheese/iStock via Getty Images Micron Technology (NASDAQ:MU) shares fell Friday, June 3 as investment firm Piper Sandler downgraded the memory chipmaker, citing its \"oversized exposure\" to ...</p>\n\n<a href=\"https://seekingalpha.com/article/4516350-micron-controls-55-percent-of-automotive-semiconductor-memory-market\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4512":"苹果概念","BK4549":"软银资本持仓","BK4548":"巴美列捷福持仓","BK4529":"IDC概念","BK4554":"元宇宙及AR概念","BK4532":"文艺复兴科技持仓","BK4515":"5G概念","BK4553":"喜马拉雅资本持仓","INTC":"英特尔","BK4567":"ESG概念","BK4534":"瑞士信贷持仓","BK4533":"AQR资本管理(全球第二大对冲基金)","BK4566":"资本集团","BK4575":"芯片概念","AMD":"美国超微公司","BK4535":"淡马锡持仓","QCOM":"高通","BK4543":"AI","BK4527":"明星科技股","MU":"美光科技","BK4550":"红杉资本持仓","BK4579":"人工智能","BK4141":"半导体产品","BK4503":"景林资产持仓","BK4551":"寇图资本持仓","NVDA":"英伟达","NXPI":"恩智浦","BK4573":"虚拟现实","BK4561":"索罗斯持仓","BK4581":"高盛持仓"},"source_url":"https://seekingalpha.com/article/4516350-micron-controls-55-percent-of-automotive-semiconductor-memory-market","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2240272383","content_text":"Say-Cheese/iStock via Getty Images Micron Technology (NASDAQ:MU) shares fell Friday, June 3 as investment firm Piper Sandler downgraded the memory chipmaker, citing its \"oversized exposure\" to consumer electronics. With Micron in the spotlight, other bellwether semiconductor companies also were negatively impacted. Intel (INTC) was off by 2.6% while Nvidia (NVDA) was down by 4.5%, Qualcomm (QCOM) shares fell by 3.5% and Advanced Micro Devices (AMD) dropped 3%. According to the Tech Note in Seeking Alpha: Micron is also not as exposed to the automotive market, which Kumar said events like rising rates, a slowing macro and the possibility of excess inventory may be a concern. Kumar pointed out that Micron's exposure of greater than 50% to consumer markets is higher than many other semiconductor companies, and with some weakness in the mobile and PC markets, it's likely there could be \"additional pressure on the company.\" My Analysis Perhaps it's in the definitions of the Piper Sandler database used to downgrade Micron. But my analysis shows significantly different metrics, which is shown below in this article. Automotive Memory Shown in Chart 1, Micron's share of the total Automotive Memory market of $3,700 million was 55.0% in 2021, up slightly from 53.9% in 2020, according to The Information Network's report entitled \"Hot ICs: A Market Analysis of Artificial Intelligence (\"AI\"), 5G, Automotive, and Memory Chips.\" Chart 1 The Information Network Automotive Semiconductor Chart 2 shows that Micron's share of the total Automotive Semiconductor Market of $51,600 million was 3.9%, up slightly from 3.4% in 2020. Chart 2 The Information Network Consumer Semiconductor Chart 3 shows Micron's share of the global Consumer Semiconductor market of $46,800 million was 2.5% in 2021, down slightly from 2.8% in 2020. Note that my analysis of the \"Consumer\" segment is based on Industry Consortia \"Semiconductor Industry Association\" definitions. Chart 3 The Information Network Smartphone Semiconductor Chart 4 shows Micron's share of the global Smartphone Semiconductor market of $88,100 million was 8.2% in 2021, down from 10.3% in 2020. Chart 4 The Information Network Investor Takeaway The Piper Sandler analysis states that Micron's exposure was greater than 50% of consumer markets. My analysis shows that it is just 2.5% of the $46 billion consumer semiconductor (Chart 3) and 8% of the $88 billion smartphone semiconductor markets (Chart 4). These shares are significantly below the 50% share reported by Piper Sandler. In the Automotive semiconductor market, Piper Sandler reports that Micron is also not as exposed to the automotive market. In my analysis, Micron has a 55% share of the $3.7 billion market (Chart 1), which in my opinion, is significantly more than \"not as exposed.\" Indeed, if we consider the overall Automotive Semiconductor market, Micron does have just a 3.9% share of the $52 billion market. Investors must consider that Micron's automotive share of total revenues is 7% compared to semiconductor manufacturers that specialize in the automotive market, such as NXP Semiconductors (NXPI) with a 47% exposure, or Infineon with a 46% exposure. I rate Micron a buy. My analysis also correlates with Seeking Alpha's Ratings and Factor Grades shown in Chart 5. Chart 5 Seeking Alpha","news_type":1},"isVote":1,"tweetType":1,"viewCount":306,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9059006642,"gmtCreate":1654257173786,"gmtModify":1676535420886,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"authorIdStr":"4101449357353590","idStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/MU\">$Micron Technology(MU)$</a>Just when it starts to go on the upside, comes a downgrade that wiped out all the gains....","listText":"<a href=\"https://ttm.financial/S/MU\">$Micron Technology(MU)$</a>Just when it starts to go on the upside, comes a downgrade that wiped out all the gains....","text":"$Micron Technology(MU)$Just when it starts to go on the upside, comes a downgrade that wiped out all the gains....","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059006642","isVote":1,"tweetType":1,"viewCount":699,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9022539667,"gmtCreate":1653542165959,"gmtModify":1676535301801,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"authorIdStr":"4101449357353590","idStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/UAA\">$Under Armour Class A(UAA)$</a>'The only way is through' UA's brand tagline previously..new CEO could pave the way for brand. Outgoing CEO too operational, not savvy enough to addvalue to shareholders","listText":"<a href=\"https://ttm.financial/S/UAA\">$Under Armour Class A(UAA)$</a>'The only way is through' UA's brand tagline previously..new CEO could pave the way for brand. Outgoing CEO too operational, not savvy enough to addvalue to shareholders","text":"$Under Armour Class A(UAA)$'The only way is through' UA's brand tagline previously..new CEO could pave the way for brand. Outgoing CEO too operational, not savvy enough to addvalue to shareholders","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9022539667","isVote":1,"tweetType":1,"viewCount":557,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9064603285,"gmtCreate":1652314544047,"gmtModify":1676535075029,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"authorIdStr":"4101449357353590","idStr":"4101449357353590"},"themes":[],"htmlText":"Thanks for sharing!","listText":"Thanks for sharing!","text":"Thanks for sharing!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9064603285","repostId":"2234695278","repostType":2,"repost":{"id":"2234695278","kind":"news","pubTimestamp":1652248744,"share":"https://ttm.financial/m/news/2234695278?lang=&edition=fundamental","pubTime":"2022-05-11 13:59","market":"us","language":"en","title":"Palantir: Bears Have Been Right, But This Is Another Buying Opportunity","url":"https://stock-news.laohu8.com/highlight/detail?id=2234695278","media":"Seeking Alpha","summary":"SummaryShares of Palantir continue to sell off as many considered Q1 2022 a mixed bag after earnings","content":"<html><head></head><body><p><b>Summary</b></p><ul><li>Shares of Palantir continue to sell off as many considered Q1 2022 a mixed bag after earnings were released.</li><li>Palantir is well positioned with more than $2 billion in cash and $0 of debt on the books and can sustain its current net losses for more than 5 years.</li><li>Palantir continues to add more clients, deals, and billings which should keep them on track for their 30% revenue increase annual targets.</li><li>Palantir has a fortress balance sheet in addition to seeing their financials improve as there is a clear path to GAAP profitability in the future.</li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/23d0f121f38325521c0b8ebbb42b26b3\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\"/><span>Michael Vi/iStock Editorial via Getty Images</span></p><p>Shares of Palantir (NYSE:PLTR) have been decimated as multiples from growth companies contracted during the massive correction we&#39;re living through. PLTR reported Q1 2022 earnings into a market that continues to sell off and a Nasdaq that&#39;s officially in a bear market. Prior to the conference call ending or investors reading/digesting the quarterly report, shares of PLTR plunged by over 15%, breaching the $8 mark. Shares have lost 73.68% from their 52-week highs and are now trading below their direct listing price from the fall of 2020. It could be a while before the pain ends, but PLTR is a long-term investment for me, and I am continuing to dollar cost average into my position. I invested in PLTR right after it went public and continued to buy shares on the way up and also on the way down.</p><p>The analyst community was looking for PLTR to earn an adjusted $0.04 per share on $443.51 million, and PLTR delivered $0.02 on $446 million of revenue. The market&#39;s reaction is certainly reflected in PLTR&#39;s steep sell-off as it&#39;s nothing but a sea of red. When you go under the surface of the headlines, PLTR is firing on all cylinders as overall revenue grew 31% YoY, their customer base increased by 86% YoY as PLTR added new customers in Q1 2022, and commercial revenue grew 54% YoY. The funny thing is that the market used to be worried about commercial clients and revenue. The blemish on PLTR&#39;s track record was that its revenue mix was primarily dominated by government revenue. In Q1 2022, commercial revenue grew to $205 million, accounting for 45.96% of their quarterly revenue.</p><p><b>Palantir&#39;s Government And Commercial Sectors Continue To Grow During This Volatile Environment</b></p><p>PLTR has demonstrated a 30% CAGR over the past 8 years in its U.S government revenue growth. Over the previous 3 years, PLTR has grown its Q1 revenue from the government side by $112 million (48.91%) in 2021 and another $105 million (30.79%) in 2022. Over the past two years, PLTR&#39;s Q1 government revenue has more than doubled as it has grown by $123 million or 104.24%.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/edeff65806fe98dfc4be733eed7a04b7\" tg-width=\"640\" tg-height=\"374\" referrerpolicy=\"no-referrer\"/><span>Steven Fiorillo, Palantir</span></p><p>On the commercial side, PLTR has certainly answered everyone&#39;s questions about growing its customer base and revenue, regardless of whether the government side still represents more than 50% of quarterly revenue. Over the previous 2 years, PLTR&#39;s commercial business has grown by $94 million (84.69%) in Q1 from $111 million to $205 million in revenue. In 2021, PLTR grew its Q1 revenue by $22 million (19.82%) YoY but in Q1 of 2022 saw its commercial business ramp up by $72 billion (54.14%) YoY. The critical aspect to keep in mind is that PLTR wasn&#39;t widely known outside of the government sector, and even fewer companies knew that their product offerings were applicable to commercial entities. Q1 of 2022 represents validation that businesses on the commercial side are implementing PLTR&#39;s products as their commercial customer count grew YoY by 207% to 184 clients from 60 clients.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/87b41ad985afd3bbf6c3cc754c4d3363\" tg-width=\"640\" tg-height=\"374\" referrerpolicy=\"no-referrer\"/><span>Steven Fiorillo, Palantir</span></p><p>It looks like PLTR will be reporting its total customer count as a combined figure which includes both the government and commercial segments. These numbers are critical to PLTR&#39;s future growth and indicate a bright future. Over the previous year, PLTR has added 128 new customers, growing its client base by 86% YoY. Going back an additional quarter, PLTR has added 138 clients, increasing its customers by 99.28% over the previous 5 quarters. While these figures are important, the critical aspect is that PLTR has consistently added more customers QoQ in this period. In Q1 2021, PLTR added 10 customers, then 20 in Q2 2021, 34 in both Q3 and Q4 of 2021, and 40 new customers in this recent quarter.</p><p>More customers correlate to more revenue, and PLTR is thriving in a market full of uncertainty. PLTR&#39;s average revenue per top 20 customers increased by 24% YoY to $45 million from $36 million on the commercial side. In Q1 2022, PLTR closed 208 deals compared to 81 in Q1 of 2021, which is an increase of 157%, while their billings jumped by 35% to $490 million from $362 million. Last year, PLTR had $2.8 billion in remaining deal value, which has increased by 26% to $3.5 billion in Q1 2022, while remaining performance obligations increased 86% YoY to $1.2 billion.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/f76987fc553759654847bf815748a9ab\" tg-width=\"640\" tg-height=\"358\" referrerpolicy=\"no-referrer\"/><span>Palantir</span></p><p><b>The Investment Community Should Take A Closer Look At Q1 2022&#39;s Financials As There Is A Clear Path To Operational Profitability</b></p><p>The current market dynamics are unfavorable toward growth companies that are not GAAP profitable, creating a sea of red in many portfolios. Just because a company doesn&#39;t show a profit doesn&#39;t mean their headed toward bankruptcy, and analyzing the financials becomes increasingly important to determine if there is a path to profitability or if you&#39;re invested in a losing hand.</p><p>PLTR&#39;s income statement continues to strengthen and tells an interesting story. In Q1 YoY PLTR added $105.12 million of revenue while their cost of revenue only increased by $20.3 million. Gross profit in Q1 2022 increased by $84.83 million, and PLTR&#39;s gross profit margin slightly increased by just over ½ of a percentage point. From a cost of revenue perspective, PLTR isn&#39;t foolishly spending capital on growing its top line and has slightly increased its gross profit margin, which indicates a strong demand for its services. PLTR&#39;s operating expenses increased by $10.26 million (2.7%) YoY, while they experienced $105.12 million in revenue growth. Operationally PLTR has found its sweet spot as R&amp;D, and general and administrative expenses declined YoY, allowing PLTR to allocate more capital to its sales and marketing segments. Overall, YoY PLTR&#39;s loss from operations declined by -$74.58 million (-65.41%) as they finished Q1 2022, losing -$39.44 million.</p><p>Based on the current figures, if PLTR grows its revenue YoY in Q1 of 2023 by 30% to $580.26 million and its cost of revenue increases at the same rate, it would come in at $120.25 million for a gross profit of $460 million. If total operating expenses also increased at the same rate YoY, it would come in at $401.93 million. This would generate operational profitability in Q1 2023 to the tune of $40.19 million. There is certainly a path to operational profitability over the next year and a road to profitability on a GAAP basis in the back half of 2023.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/1cefc1f546b70685a59fb48402dab5f4\" tg-width=\"640\" tg-height=\"682\" referrerpolicy=\"no-referrer\"/><span>Palantir</span></p><p>Not all growth companies are built the same, and PLTR has a fortress of a balance sheet. PLTR has $2.27 billion of cash on hand. This allows PLTR to grow without tapping the debt markets, and based on their -$101.38 million net loss in Q1, their cash stockpile could absorb these losses for more than 5 years. PLTR&#39;s net loss has also been declining and could turn to a net profit sometime in 2023. Based on PLTR&#39;s rate of growth, margins, and cash on hand, they are on the correct course. PLTR doesn&#39;t need to focus solely on generating net positive earnings and can continue to build the best products, grow its customer base, and grow its top line while maintaining consistent margins. PLTR is already profitable on an adjusted and normalized FCF methodology and should become profitable on a GAAP net income basis well before its cash stockpile is jeopardized.</p><p>When you look at PLTR&#39;s liabilities, there is a significant line item that is non-existent. PLTR is debt-free, and its total liabilities are just under $1 billion. 100% of PLTR&#39;s current FCF and future net income can be allocated freely without having to budget for interest payments or the repayment of debt. I can&#39;t stress how important this is to me, as PLTR is building its company without a major liability that has crippled many other companies in the past.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5bd95427d40322feb0065fa7670be087\" tg-width=\"640\" tg-height=\"784\" referrerpolicy=\"no-referrer\"/><span>Palantir</span></p><p><b>Why I believe Palantir&#39;s Future Looks Bright Even Though The Chart Is Downright Frightening</b></p><p>Yes, PLTR&#39;s share price can continue to fall, but the likelihood of going to $0 in the short term is not worth discussing. As I outlined in the previous section, PLTR has $0 in debt and enough cash on hand to sustain operations at their current rate for more than 5 years. The bears have been correct the entire way down, and even though my conviction hasn&#39;t changed, I have been wrong. Maybe shares go to $5, I don&#39;t have a crystal ball, but what I can say is I am treating this as an opportunity. At this point, you either believe PLTR has a bright future ahead of them, or they are in serious financial distress. Reading through PLTR&#39;s financials, they are not in financial distress, and based on their growth, we could see GAAP profitability next year. My investment time horizon has always been out to 2030 as I believe PLTR will become the most important software company behind Microsoft (MSFT). I can withstand the short-term pain because I am more concerned with what PLTR&#39;s share price is in 2025 and 2027, not in 2022.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/8914186e3fd367f444c8f42eab2cb9ba\" tg-width=\"640\" tg-height=\"193\" referrerpolicy=\"no-referrer\"/><span>Seeking Alpha</span></p><p>I don&#39;t believe the market realizes or understands the potential of Foundry. PLTR partners with their clients to build industry-specific platforms that can be sold to their clients and partners, replicating what PLTR did with Airbus through Skywise. Shyam Sankar touched on this during the conference call when he outlined that Airbus had rolled out an internally developed supply chain network control tower which was a suite built on top of Foundry&#39;s application development infrastructure. What he didn&#39;t mention is that PLTR has been replicating this within different industries.</p><p>PLTR partnered with Jacobs Engineering Group (J) to leverage its existing O&amp;M portfolio and proprietary machine learning modules and wastewater process optimization tools to develop a dynamic management solution suite on PLTR&#39;s Foundry system. J and PLTR are planning other joint technical and programmatic initiatives to serve U.S. federal government customers. J is the ideal partner for PLTR as they provide consulting, technical, scientific, and project delivery services for the government and private sectors in the United States, Europe, Canada, India, rest of Asia, Australia, New Zealand, South America, Mexico, the Middle East, and Africa. PLTR also partnered with Hyundai Heavy Industries to form a data joint venture. This will allow the two entities to build a new big data platform for Hyundai Heavy Industries. Hyundai Heavy Industries is a $5 billion South Korean company that has grown into the world&#39;s leading heavy industries organization which has diversified from shipbuilding to offshore &amp; engineering, Naval &amp; Special Ships, and engine &amp; machinery. Hyundai Heavy is a global entity with partnerships throughout the globe. Based on the agreement, Hyundai Heavy Industries and PLTR will jointly build a big data platform for the Group&#39;s key affiliates related to shipbuilding &amp; offshore engineering, energy, and industrial machinery.</p><p>We learned that PLTR closed a renewal deal with a Fortune 100 company for over $150 million in April. We also learned that PLTR&#39;s hospital operations Suite as a module is now covering over 37,000 beds throughout U.S hospitals which is up from 1,000 beds on 1/1/22. On the government side, PLTR has expanded its partnership with the CDC, and was awarded a framework agreement in Germany for Gotham and Foundry with an initial order placed from the Bavarian Police. The U.K Royal Navy closed a $10 million expansion with PLTR to cover strategic workforce planning and supply chain management.</p><p>PLTR has launched 8 new products since going public, which include Edge AI, HyperAuto, Cosmos, Apollo for customers SaaS, MetaConstellation, Pipeline builder, OPIs, and Titan. The most important aspect is PLTR is building software to solve the world&#39;s most critical problems, and in doing so, their total addressable market is expanding. PLTR continues to deepen its government relationships while building its commercial business because of the success its solutions create.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/e7b7f6d7bd9cedfdf4c21006ca0fbf61\" tg-width=\"640\" tg-height=\"357\" referrerpolicy=\"no-referrer\"/><span>Palantir</span></p><p>The proof is in the numbers. On the government side, PLTR has a long-term trend from 2013-to 2021 of driving growth at a 30% rate from the U.S government. PLTR&#39;s total customers wouldn&#39;t have grown by 86% YoY to 277 if their products weren&#39;t impactful to government entities and individual organizations. The big contention in Q4 2021 was that the government customer count didn&#39;t increase throughout the year. In Q1 2022, PLTR&#39;s government customer count grew by 3 clients to 93 total government customers. We&#39;re seeing more deals closed, elevated levels of billings, and larger average revenue from PLTR&#39;s top customers. These critical aspects tell a promising story for PLTR&#39;s future.</p><p><b>Conclusion</b></p><p>The herd mentality is perplexing; everyone wants to buy on the way up because they are afraid of missing out, but on the way down, many just classify PLTR as a bad stock. If you&#39;re not doing your own due diligence or understanding why you&#39;re making an investment in a company, maybe index funds are a better investment for you. Investing is a two-way street and allocating capital to individual equities comes with additional risks.</p><p>PLTR has always been a long-term buy-and-hold for me. Since PLTR went public, I bought my initial shares for under $10, I have purchased shares on the way up and on the way down. I added shares this morning and will be adding shares in the future. I am not worried about the share price in 2022 or 2023; while I would rather see this position in the black when I look at my account, I look at the current price weakness as an opportunity. Every metric I care about points to future growth while their losses narrow. PLTR has over $2 billion in cash on hand and can sustain its current quarterly losses for more than 5 years. This is a company with $0 in debt, and it&#39;s trading as if bankruptcy is in its future. I couldn&#39;t tell you when the markets will turn, but PLTR won&#39;t be <a href=\"https://laohu8.com/S/AONE.U\">one</a> of the companies left in the cold. I believe these prices will look like a missed opportunity for many several years into the future. While PLTR may not get back to $20 in 2022, I have no doubt that this is a multi-bagger investment from its current level, and eventually, the market sentiment on PLTR will change.</p></body></html>","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>Palantir: Bears Have Been Right, But This Is Another Buying 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\">\nPalantir: Bears Have Been Right, But This Is Another Buying Opportunity\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-05-11 13:59 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4509441-palantir-bears-have-been-right-but-this-is-another-buying-opportunity><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryShares of Palantir continue to sell off as many considered Q1 2022 a mixed bag after earnings were released.Palantir is well positioned with more than $2 billion in cash and $0 of debt on the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4509441-palantir-bears-have-been-right-but-this-is-another-buying-opportunity\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4509441-palantir-bears-have-been-right-but-this-is-another-buying-opportunity","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2234695278","content_text":"SummaryShares of Palantir continue to sell off as many considered Q1 2022 a mixed bag after earnings were released.Palantir is well positioned with more than $2 billion in cash and $0 of debt on the books and can sustain its current net losses for more than 5 years.Palantir continues to add more clients, deals, and billings which should keep them on track for their 30% revenue increase annual targets.Palantir has a fortress balance sheet in addition to seeing their financials improve as there is a clear path to GAAP profitability in the future.Michael Vi/iStock Editorial via Getty ImagesShares of Palantir (NYSE:PLTR) have been decimated as multiples from growth companies contracted during the massive correction we're living through. PLTR reported Q1 2022 earnings into a market that continues to sell off and a Nasdaq that's officially in a bear market. Prior to the conference call ending or investors reading/digesting the quarterly report, shares of PLTR plunged by over 15%, breaching the $8 mark. Shares have lost 73.68% from their 52-week highs and are now trading below their direct listing price from the fall of 2020. It could be a while before the pain ends, but PLTR is a long-term investment for me, and I am continuing to dollar cost average into my position. I invested in PLTR right after it went public and continued to buy shares on the way up and also on the way down.The analyst community was looking for PLTR to earn an adjusted $0.04 per share on $443.51 million, and PLTR delivered $0.02 on $446 million of revenue. The market's reaction is certainly reflected in PLTR's steep sell-off as it's nothing but a sea of red. When you go under the surface of the headlines, PLTR is firing on all cylinders as overall revenue grew 31% YoY, their customer base increased by 86% YoY as PLTR added new customers in Q1 2022, and commercial revenue grew 54% YoY. The funny thing is that the market used to be worried about commercial clients and revenue. The blemish on PLTR's track record was that its revenue mix was primarily dominated by government revenue. In Q1 2022, commercial revenue grew to $205 million, accounting for 45.96% of their quarterly revenue.Palantir's Government And Commercial Sectors Continue To Grow During This Volatile EnvironmentPLTR has demonstrated a 30% CAGR over the past 8 years in its U.S government revenue growth. Over the previous 3 years, PLTR has grown its Q1 revenue from the government side by $112 million (48.91%) in 2021 and another $105 million (30.79%) in 2022. Over the past two years, PLTR's Q1 government revenue has more than doubled as it has grown by $123 million or 104.24%.Steven Fiorillo, PalantirOn the commercial side, PLTR has certainly answered everyone's questions about growing its customer base and revenue, regardless of whether the government side still represents more than 50% of quarterly revenue. Over the previous 2 years, PLTR's commercial business has grown by $94 million (84.69%) in Q1 from $111 million to $205 million in revenue. In 2021, PLTR grew its Q1 revenue by $22 million (19.82%) YoY but in Q1 of 2022 saw its commercial business ramp up by $72 billion (54.14%) YoY. The critical aspect to keep in mind is that PLTR wasn't widely known outside of the government sector, and even fewer companies knew that their product offerings were applicable to commercial entities. Q1 of 2022 represents validation that businesses on the commercial side are implementing PLTR's products as their commercial customer count grew YoY by 207% to 184 clients from 60 clients.Steven Fiorillo, PalantirIt looks like PLTR will be reporting its total customer count as a combined figure which includes both the government and commercial segments. These numbers are critical to PLTR's future growth and indicate a bright future. Over the previous year, PLTR has added 128 new customers, growing its client base by 86% YoY. Going back an additional quarter, PLTR has added 138 clients, increasing its customers by 99.28% over the previous 5 quarters. While these figures are important, the critical aspect is that PLTR has consistently added more customers QoQ in this period. In Q1 2021, PLTR added 10 customers, then 20 in Q2 2021, 34 in both Q3 and Q4 of 2021, and 40 new customers in this recent quarter.More customers correlate to more revenue, and PLTR is thriving in a market full of uncertainty. PLTR's average revenue per top 20 customers increased by 24% YoY to $45 million from $36 million on the commercial side. In Q1 2022, PLTR closed 208 deals compared to 81 in Q1 of 2021, which is an increase of 157%, while their billings jumped by 35% to $490 million from $362 million. Last year, PLTR had $2.8 billion in remaining deal value, which has increased by 26% to $3.5 billion in Q1 2022, while remaining performance obligations increased 86% YoY to $1.2 billion.PalantirThe Investment Community Should Take A Closer Look At Q1 2022's Financials As There Is A Clear Path To Operational ProfitabilityThe current market dynamics are unfavorable toward growth companies that are not GAAP profitable, creating a sea of red in many portfolios. Just because a company doesn't show a profit doesn't mean their headed toward bankruptcy, and analyzing the financials becomes increasingly important to determine if there is a path to profitability or if you're invested in a losing hand.PLTR's income statement continues to strengthen and tells an interesting story. In Q1 YoY PLTR added $105.12 million of revenue while their cost of revenue only increased by $20.3 million. Gross profit in Q1 2022 increased by $84.83 million, and PLTR's gross profit margin slightly increased by just over ½ of a percentage point. From a cost of revenue perspective, PLTR isn't foolishly spending capital on growing its top line and has slightly increased its gross profit margin, which indicates a strong demand for its services. PLTR's operating expenses increased by $10.26 million (2.7%) YoY, while they experienced $105.12 million in revenue growth. Operationally PLTR has found its sweet spot as R&D, and general and administrative expenses declined YoY, allowing PLTR to allocate more capital to its sales and marketing segments. Overall, YoY PLTR's loss from operations declined by -$74.58 million (-65.41%) as they finished Q1 2022, losing -$39.44 million.Based on the current figures, if PLTR grows its revenue YoY in Q1 of 2023 by 30% to $580.26 million and its cost of revenue increases at the same rate, it would come in at $120.25 million for a gross profit of $460 million. If total operating expenses also increased at the same rate YoY, it would come in at $401.93 million. This would generate operational profitability in Q1 2023 to the tune of $40.19 million. There is certainly a path to operational profitability over the next year and a road to profitability on a GAAP basis in the back half of 2023.PalantirNot all growth companies are built the same, and PLTR has a fortress of a balance sheet. PLTR has $2.27 billion of cash on hand. This allows PLTR to grow without tapping the debt markets, and based on their -$101.38 million net loss in Q1, their cash stockpile could absorb these losses for more than 5 years. PLTR's net loss has also been declining and could turn to a net profit sometime in 2023. Based on PLTR's rate of growth, margins, and cash on hand, they are on the correct course. PLTR doesn't need to focus solely on generating net positive earnings and can continue to build the best products, grow its customer base, and grow its top line while maintaining consistent margins. PLTR is already profitable on an adjusted and normalized FCF methodology and should become profitable on a GAAP net income basis well before its cash stockpile is jeopardized.When you look at PLTR's liabilities, there is a significant line item that is non-existent. PLTR is debt-free, and its total liabilities are just under $1 billion. 100% of PLTR's current FCF and future net income can be allocated freely without having to budget for interest payments or the repayment of debt. I can't stress how important this is to me, as PLTR is building its company without a major liability that has crippled many other companies in the past.PalantirWhy I believe Palantir's Future Looks Bright Even Though The Chart Is Downright FrighteningYes, PLTR's share price can continue to fall, but the likelihood of going to $0 in the short term is not worth discussing. As I outlined in the previous section, PLTR has $0 in debt and enough cash on hand to sustain operations at their current rate for more than 5 years. The bears have been correct the entire way down, and even though my conviction hasn't changed, I have been wrong. Maybe shares go to $5, I don't have a crystal ball, but what I can say is I am treating this as an opportunity. At this point, you either believe PLTR has a bright future ahead of them, or they are in serious financial distress. Reading through PLTR's financials, they are not in financial distress, and based on their growth, we could see GAAP profitability next year. My investment time horizon has always been out to 2030 as I believe PLTR will become the most important software company behind Microsoft (MSFT). I can withstand the short-term pain because I am more concerned with what PLTR's share price is in 2025 and 2027, not in 2022.Seeking AlphaI don't believe the market realizes or understands the potential of Foundry. PLTR partners with their clients to build industry-specific platforms that can be sold to their clients and partners, replicating what PLTR did with Airbus through Skywise. Shyam Sankar touched on this during the conference call when he outlined that Airbus had rolled out an internally developed supply chain network control tower which was a suite built on top of Foundry's application development infrastructure. What he didn't mention is that PLTR has been replicating this within different industries.PLTR partnered with Jacobs Engineering Group (J) to leverage its existing O&M portfolio and proprietary machine learning modules and wastewater process optimization tools to develop a dynamic management solution suite on PLTR's Foundry system. J and PLTR are planning other joint technical and programmatic initiatives to serve U.S. federal government customers. J is the ideal partner for PLTR as they provide consulting, technical, scientific, and project delivery services for the government and private sectors in the United States, Europe, Canada, India, rest of Asia, Australia, New Zealand, South America, Mexico, the Middle East, and Africa. PLTR also partnered with Hyundai Heavy Industries to form a data joint venture. This will allow the two entities to build a new big data platform for Hyundai Heavy Industries. Hyundai Heavy Industries is a $5 billion South Korean company that has grown into the world's leading heavy industries organization which has diversified from shipbuilding to offshore & engineering, Naval & Special Ships, and engine & machinery. Hyundai Heavy is a global entity with partnerships throughout the globe. Based on the agreement, Hyundai Heavy Industries and PLTR will jointly build a big data platform for the Group's key affiliates related to shipbuilding & offshore engineering, energy, and industrial machinery.We learned that PLTR closed a renewal deal with a Fortune 100 company for over $150 million in April. We also learned that PLTR's hospital operations Suite as a module is now covering over 37,000 beds throughout U.S hospitals which is up from 1,000 beds on 1/1/22. On the government side, PLTR has expanded its partnership with the CDC, and was awarded a framework agreement in Germany for Gotham and Foundry with an initial order placed from the Bavarian Police. The U.K Royal Navy closed a $10 million expansion with PLTR to cover strategic workforce planning and supply chain management.PLTR has launched 8 new products since going public, which include Edge AI, HyperAuto, Cosmos, Apollo for customers SaaS, MetaConstellation, Pipeline builder, OPIs, and Titan. The most important aspect is PLTR is building software to solve the world's most critical problems, and in doing so, their total addressable market is expanding. PLTR continues to deepen its government relationships while building its commercial business because of the success its solutions create.PalantirThe proof is in the numbers. On the government side, PLTR has a long-term trend from 2013-to 2021 of driving growth at a 30% rate from the U.S government. PLTR's total customers wouldn't have grown by 86% YoY to 277 if their products weren't impactful to government entities and individual organizations. The big contention in Q4 2021 was that the government customer count didn't increase throughout the year. In Q1 2022, PLTR's government customer count grew by 3 clients to 93 total government customers. We're seeing more deals closed, elevated levels of billings, and larger average revenue from PLTR's top customers. These critical aspects tell a promising story for PLTR's future.ConclusionThe herd mentality is perplexing; everyone wants to buy on the way up because they are afraid of missing out, but on the way down, many just classify PLTR as a bad stock. If you're not doing your own due diligence or understanding why you're making an investment in a company, maybe index funds are a better investment for you. Investing is a two-way street and allocating capital to individual equities comes with additional risks.PLTR has always been a long-term buy-and-hold for me. Since PLTR went public, I bought my initial shares for under $10, I have purchased shares on the way up and on the way down. I added shares this morning and will be adding shares in the future. I am not worried about the share price in 2022 or 2023; while I would rather see this position in the black when I look at my account, I look at the current price weakness as an opportunity. Every metric I care about points to future growth while their losses narrow. PLTR has over $2 billion in cash on hand and can sustain its current quarterly losses for more than 5 years. This is a company with $0 in debt, and it's trading as if bankruptcy is in its future. I couldn't tell you when the markets will turn, but PLTR won't be one of the companies left in the cold. I believe these prices will look like a missed opportunity for many several years into the future. While PLTR may not get back to $20 in 2022, I have no doubt that this is a multi-bagger investment from its current level, and eventually, the market sentiment on PLTR will change.","news_type":1},"isVote":1,"tweetType":1,"viewCount":390,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9065636110,"gmtCreate":1652184980130,"gmtModify":1676535047343,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"authorIdStr":"4101449357353590","idStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/SOFI\">$SoFi Technologies Inc.(SOFI)$</a>Why is Sofi dropping so much in PM?","listText":"<a href=\"https://ttm.financial/S/SOFI\">$SoFi Technologies Inc.(SOFI)$</a>Why is Sofi dropping so much in PM?","text":"$SoFi Technologies Inc.(SOFI)$Why is Sofi dropping so much in PM?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9065636110","isVote":1,"tweetType":1,"viewCount":1060,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"4093776090978210","authorId":"4093776090978210","name":"ZhengWen","avatar":"https://static.tigerbbs.com/54ee488862e06f4f5071fbea220cc291","crmLevel":1,"crmLevelSwitch":0,"authorIdStr":"4093776090978210","idStr":"4093776090978210"},"content":"Pull back by other fintech earning reports…. 2day will be SOFI’s turn","text":"Pull back by other fintech earning reports…. 2day will be SOFI’s turn","html":"Pull back by other fintech earning reports…. 2day will be SOFI’s turn"}],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":9002568891,"gmtCreate":1642042265932,"gmtModify":1676533675390,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/LCID\">$Lucid Group Inc(LCID)$</a>Could still climb to 50 by end of week. May slide due to the Jan 19event but I don’t see how/why PIF will offload..buy during dips!","listText":"<a href=\"https://ttm.financial/S/LCID\">$Lucid Group Inc(LCID)$</a>Could still climb to 50 by end of week. May slide due to the Jan 19event but I don’t see how/why PIF will offload..buy during dips!","text":"$Lucid Group Inc(LCID)$Could still climb to 50 by end of week. May slide due to the Jan 19event but I don’t see how/why PIF will offload..buy during dips!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":8,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9002568891","isVote":1,"tweetType":1,"viewCount":1545,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9045996885,"gmtCreate":1656549657147,"gmtModify":1676535851124,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"typical of&nbsp;MM and these short sellers to stir up reports for their own gains.&nbsp;","listText":"typical of&nbsp;MM and these short sellers to stir up reports for their own gains.&nbsp;","text":"typical of MM and these short sellers to stir up reports for their own gains.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9045996885","repostId":"1121505043","repostType":4,"repost":{"id":"1121505043","kind":"news","pubTimestamp":1656561665,"share":"https://ttm.financial/m/news/1121505043?lang=&edition=fundamental","pubTime":"2022-06-30 12:01","market":"us","language":"en","title":"NIO: Questions And Challenges To The Grizzly Short-Seller Report","url":"https://stock-news.laohu8.com/highlight/detail?id=1121505043","media":"seekingalpha","summary":"SummaryShort-seller Grizzly Research has released a report outlining findings of alleged fraud by NIO on Tuesday evening.The report attempted to outline how NIO, through an unconsolidated entity, is f","content":"<html><head></head><body><p><b>Summary</b></p><ul><li>Short-seller Grizzly Research has released a report outlining findings of alleged fraud by NIO on Tuesday evening.</li><li>The report attempted to outline how NIO, through an unconsolidated entity, is falsely inflating revenue and net income pertaining to its BaaS business.</li><li>The report also accused CEO Bin Li of association with fraudulent activities in the past. The information was largely used as support for Grizzly&#39;s claims of financial manipulation at NIO.</li><li>However, we believe some of the information reported by Grizzly have been exaggerated to support its short bias against NIO. We also question the validity of some of the quantified impacts that Grizzly is claiming against NIO&#39;s BaaS operations.</li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/346379c1e5a1a4087e614ef0b8a18caa\" tg-width=\"1080\" tg-height=\"720\" referrerpolicy=\"no-referrer\"/><span>Drew Angerer/Getty Images News</span></p><p>Grizzly Research (&#34;Grizzly&#34;) has released a short-seller report on NIO (NYSE:NIO) Tuesday morning, citing the Chinese electric vehicle (“EV”) company has engaged in the exaggeration of revenue and profitability via aggressive accounting methods and fraudulent means. In addition to outlining the allegedmeasures NIO has taken to falsely inflate its top- and bottom-line since 2020, Grizzly has also gathered extensive research in an attempt to character-assassinate NIO CEO Bin Li in order to “dot the i’s and cross the t’s” in its argument that the three core elements of fraud – opportunity, incentive and rationalization – exist in this situation for the EV maker.</p><p>While some of the findings raised in the short-seller report may raise questions that only NIO management can answer, there are also questionable and groundless arguments made by Grizzly that could significantly mislead and deceive existing and potential investors in the EV stock. The following analysis will focus on an overview of the short-seller’s core claim against NIO – namely, false inflation of revenue and net income via aggressive accounting and potentially fraudulent means – and provide a walkthrough of questions / challenges we have over the validity of some of those claims.</p><p><b>Accounting Crash Course: NIO’s BaaS Revenue Recognition Method</b></p><p>Through publicly disclosed information within NIO’s audited annual report, Grizzly had identified that NIO is frontloading and inflating revenue recognition pertaining to its battery-as-a-service (“BaaS”) sales via an unconsolidated related party.</p><p>In 2020, NIO, alongside an external consortium of investors that consist of EV battery maker CATL, Hubei Science Technology Investment Group, and a subsidiary of Fuotai Junan International Holdings Limited, have together created the joint venture “Wuhan Weineng Battery Asset Co., Ltd.,” (“Weineng”). Weineng was established in 2020, the same time when NIO’s battery lending service BaaS was introduced.</p><p>Under BaaS, NIO customers are eligible for a one-time discount of up to RMB 128,000 ($19,133) on the vehicle purchase if they opt for the battery lending subscription program instead of buying the battery with the vehicle upfront. This strategy has been an effective mean in fuelling the adoption of NIO EVs in China, especially with additional government subsidies for purchases that are compatible with battery swapping technology. All sales and costs pertaining to BaaS are managed by Weineng.</p><p>Now, the Weineng joint venture, in which NIO holds a 19.8% equity interest in, has been accounted for as an “equity-accounted investment” on the EV maker’s financial statements, given the definition of control under GAAP-based accounting has not been met (further discussed in later sections). Under GAAP-based accounting for related party transactions, “intragroup related party transactions and outstanding balances are eliminated, except for those between an investment entity and its subsidiaries measured at fair value through profit or loss, in the preparation of consolidated financial statements of the group”:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/b533b2a1e657134b3b33f231c2b11f74\" tg-width=\"640\" tg-height=\"292\" referrerpolicy=\"no-referrer\"/><span>GAAP Rules on Related Party Disclosures (IAS)</span></p><p>Based on NIO’s disclosures within its audited annual report on its revenue recognition method pertaining to BaaS sales, the EV maker sells its battery packs to Weineng on a “back-to-back” basis when a vehicle is sold to a customer subscribed to BaaS:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d726db76c4884663e28c157208e5cd77\" tg-width=\"640\" tg-height=\"150\" referrerpolicy=\"no-referrer\"/><span>NIO Revenue Recognition Policy on BaaS Sales (NIO 2021 20F)</span></p><p>In compliance with GAAP-based accounting for revenue recognition, a sale is reported to the income statement when a performance obligation is satisfied. Under NIO’s affiliation with Weineng, NIO sells Weineng a battery pack when a customer buys a vehicle with BaaS subscription. The performance obligation here is that NIO needs to provide a battery pack to Weineng, and once this is satisfied, NIO is permitted to recognize revenue on the battery sale based on a pre-contracted transaction price for the performance obligation. For NIO, the battery sold would have been previously considered as inventory. Following the recognition of the battery sale, NIO would have also recorded cost of sales pertaining to removing the battery from its inventory balance on the balance sheet:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2203faf29e5b271342335935df358d86\" tg-width=\"389\" tg-height=\"208\" referrerpolicy=\"no-referrer\"/><span>Journal Entries for Battery Sales Business Model (Author)</span></p><p>In Weineng’s case, however, its performance obligation to customers is the provision of battery lending services on a monthly or annual basis, depending on the subscription option. As such, Weineng can only recognize monthly / annual BaaS revenue over time when it satisfies its battery lending obligation to customers. Weineng would also have to record depreciation costs over the useful life of its batteries, which are considered property, plant and equipment used in facilitating its service business:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/4bf30456c1ff78b902edfa34d719f150\" tg-width=\"598\" tg-height=\"175\" referrerpolicy=\"no-referrer\"/><span>Journal Entries for BaaS Business Model (Author)</span></p><p>This arrangement essentially allows NIO to recognize 100% of revenues pertaining to the battery pack sold to Weineng upfront upon selling a vehicle booked on BaaS on a one-for-one basis, instead of recognizing BaaS revenue and related depreciation costs on the batteries used in the BaaS business over time. The disclosed BaaS revenue recognition method for NIO also infers that the number of battery packs sold to Weineng should be equivalent to the number of BaaS subscribers as of period-end. BaaS revenues and related costs of sales (e.g. depreciation costs on batteries) recognized over time are instead in the books of Weineng, in which NIO accounts for on its balance sheet as an equity-accounted investment.</p><p>Because Weineng is an equity-accounted investment and not a consolidated entity in which NIO controls under the definition set out by GAAP-based accounting, NIO is not required to perform intragroup eliminations pertaining to the related party transaction. Instead, it is required to disclose the relationship, as well as the related amounts if material. This information is disclosed in NIO’s 2021 20 Funder “Note 26. Related Party Balances and Transactions”. Revenue and income generated by Weineng are accounted for in NIO’s financial statements as “share of (loss) / income of equity investees” pro-rated for its non-controlling interest.</p><p><b>Grizzly’s Core Short Thesis</b></p><p>Grizzly alleges the move is a fraudulent measure taken by NIO to “exaggerate revenue and profitability”. The short-seller has accused NIO of using the accounting “loophole” to frontload battery revenues pertaining to BaaS that should have been recognized over a course of about seven years (i.e. battery discount on BaaS vehicle purchase, divided by annual BaaS subscription fee).</p><p>In addition to frontloading revenue recognition on BaaS sales, Grizzly has also identified a discrepancy between the number of active BaaS subscribers and battery packs owned by Weineng as of September 30, 2021. Grizzly found thatWeineng had ownership of 40,053 battery packs as of September 30, 2021, but only had 19,000 active BaaS subscribers during the period, which is inconsistent with NIO’s claims that it only records battery sales to Weineng on a back-to-back basis with BaaS vehicle sales. Grizzly has attributed the discrepancy as NIO’s way of artificially inflating revenues by selling more battery packs to Weineng than it needs to fulfil BaaS performance obligations.</p><p>In order to support its claim that NIO is defrauding investors via the unconsolidated related party, Grizzly has also gathered additional research in an attempt to support the three key elements of the fraudulent triangle:</p><p><b>Opportunity:</b>As mentioned in the accounting overview section, the ownership structure between NIO and Weineng is accounted for as an equity-accounted investment, which allows NIO to bypass related party transaction eliminations on its financial statements. This accordingly provides an opportunity for NIO to artificially inflate its revenues at the group level by recording sales to the equity-accounted subsidiary, without the need to back it out at period end. Under GAAP-based accounting rules on related party transactions, NIO is required to disclose material details to the relationship, in which it has complied with.</p><p>The organizational structure also provides NIO an ability to recognize BaaS revenues upfront, instead of over an extended period of time given the difference in performance obligation it owes toWeinengcompared to thoseWeineng owes to BaaS subscribers. Grizzly also claims the method has allowed NIO to bypass depreciation costs on battery assets to the tune of RMB 336 million per year.</p><p><b>Incentive:</b>Grizzly has gone through extensive measures to dig up evidence to support NIO has a valid incentive for exaggerating its revenue and profitability. Citing an agreement between NIO and a state-backed consortium which has invested in a wholly-owned subsidiary “NIO China”, which requires NIO to redeem the investment upon failure in meeting pre-established performance metrics, such as achieving revenues of RMB 120 billion by 2024. However, the publicly disclosed information per NIO’s regulatory filings does not specify whether the RMB 120 billion revenue performance metric is required on an annual basis or on a cumulative basis between the time at which the agreement was forged with the state-backed investment consortium and 2024.</p><p>Grizzly has also inferred incentive for NIO to exaggerate its top- and bottom-line as a mean to pretty its valuation prospects, and attract investors from the public market.</p><p><b>Rationalization:</b>The short-seller report lacks support for how NIO tried to rationalize the alleged fraudulent reporting behaviour. However, Grizzly has proceeded to gather evidence to bolster its claim of why the likelihood of fraud at NIO is high. These include findings about NIO CEO Li’s past association with personnel that have been previously linked to high-profile fraudulent financial reporting cases like Luckin Coffee(OTCPK:LKNCY). Grizzly has also alluded to questionable behaviour by NIO CEO Li, such as pledging a NIO-affiliated subsidiary, “NIO User Trust”, in which Li personally controls to UBS AG without directly addressing the matter to shareholders. While these findings may warrant clarification from management, there is insufficient ground to warrant a fraudulent sentence to the company.</p><p>NIO management has also refuted Grizzly’s claims, saying allegations outlined in the report are “without merit and contains numerous errors, unsupported speculations and misleading conclusions and interpretations”, and has committed to bolstering public disclosures going forward to protect shareholders’ interests. Nowhere has the company tried to outright rationalize fraudulent reporting.</p><p><b>Challenging Grizzly’s Conclusion on “Control” Established by NIO Over Weineng</b></p><p>In addition to character assassination on Li to support its claims for fraudulent reporting behaviour at NIO, Grizzly has also attempted to conclude NIO’s control over Weineng. As mentioned in earlier sections, if NIO effectively “controls” Weineng, it would have to consolidate the investment and eliminate any earnings recorded via related party transactions.</p><p>First, Grizzly has identified “conflicting disclosure” between NIO’s claim that it has “significant influence” over Weineng in one place, and NIO’s claim that it only has “limited control over the business operations” ofWeinengin another place within a same regulatory filing. However, the words “significant influence” and “control” used within NIO’s regulatory filings are defined differently under GAAP-based accounting rules from general definitions of power that everyday investors are familiar with.</p><p>Significant influence is defined as “the power to participate in the financial and operating policy decisions of the investee without the power to control or jointly control those policies” under GAAP-based accounting. Significantly influence is typically established when an “entity holds, directly or indirectly, 20% or more of voting power of the investee”. NIO’s 19.8% equity interest in Weineng is sufficient to presume its “significant influence” over the investment:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/505c64f7bc18c02131dd830e5f2a5462\" tg-width=\"640\" tg-height=\"260\" referrerpolicy=\"no-referrer\"/><span>GAAP Rules on Investments in Associates and Joint Ventures (IAS)</span></p><p>Pointing to our earlier reference to the definition of control established in GAAP-based accounting, the acquiring party only establishes “control” over the acquired party if it demonstrates three primary elements:</p><p>1. “<b>Power</b>” over the acquired entity, which is defined under GAAP as a substantive right exercised by an acquirer over the acquiree for non-protective benefits (e.g. exercising rights without the need for breach of contract or majority investor support). Based on publicly disclosed information in NIO’s regulatory filings, it only holds one of nine board seats on Weineng. There is also no mention of voting agreements that would pass on majority board and/or owner voting rights to NIO. With one of nine board seats, and a 19.8% equity interest, NIO does not exhibit power over Weineng to establish control.</p><p>2. Exposure to<i>variable returns</i>from the acquiree based on the acquirer’s involvement. NIO does not generate additional fees from Weineng based on Weineng’s performance. NIO is only exposed to Weineng’s earnings through its equity-accounted share of the investment.</p><p>As for the acquirer’s involvement in interfering with returns generated from the acquiree, Grizzly has pointed to the installation of two existing NIO executives to Weineng in management roles that include “Legal Representative and Chairman” and “General Manager and Director”. However, considering NIO’s significant influence over Weineng as defined under GAAP rules explained earlier, it is not unusual for the two parties to share employees or for NIO to “participate in the financial and operating policy decisions” of Weineng through the two shared employees. As such, NIO can account for its investment inWeinengas an equity-accounted investment, as long as “control” is not established even if it has installed employees at Weineng. Based on NIO’s failure to meet criterion 1 “power”, it already fails to establish control under GAAP rules over Weineng based on the existing ownership and voting structure disclosed in regulatory filings.</p><p>Grizzly has also alluded to the installation of two NIO executives in the daily operations of Weineng as a “major conflict of interest”. However, the auditor’s report per NIO’s audited 2021 20F states that “the company has maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in<i>Internal Control – Integrated Framework</i>(2013) issued by the COSO”. The COSO framework requires that internal controls address segregation of duty requirements to ensure fair presentation of financial information without material misstatements whether due to error or fraud. As such, it is reasonable to believe that segregation of duty controls in place pertaining to the two executives’ roles in both NIO and Weineng have been tested as effective as of the reporting date.</p><p>3. The acquiring party is a<i>principal</i>in the transaction, and not an agent. Under GAAP-based accounting, an agent is “primarily engaged to act on behalf and for the benefit of another party…[and] does not control an investee when it exercises decision-making rights delegated to it”. In determining whether NIO is an agent over Weineng, the i) scope of NIO’s decision-making authority over Weineng, ii) the rights held by other investors in Weineng, iii) the remuneration in which NIO is entitled to in its affiliation with Weineng, and iv) NIO’s exposure to variability of returns from its interest in Weineng must be considered:</p><ul><li>Based on the foregoing analysis, we know that NIO’s sole decision-making authority over Weineng is limited given it only holds 19.8% equity interest with one in nine board seats in the joint venture. The two NIO executives installed in the daily operations of Weineng also do not exhibit characteristics of sole control over the joint ventures’ business.</li><li>The remainder of the investment consortium over Weineng holds the remaining eight of nine board seats, and 80.2% equity interest in the joint venture. There have also been no mention of signed-over voting rights by the investment consortium to NIO in publicly disclosed information that would give NIO control over Weineng.</li><li>In addition to battery sales, NIO is also entitled to service revenue earned from Weineng through service agreements. NIO earns revenue for providing “battery packmonitoring, maintenance, upgrade, replacement, IT system support, etc.” to Weineng via monthly service charges. As of the reporting year ended December 31, 2021, service revenues pertaining to the service agreements between NIO and Weineng were immaterial according to disclosures in “Note 2. Summary of Significant Accounting Policies”, section<i>(r) Revenue recognition</i>in the 2021 20F.</li><li>As discussed in the control assessment under criterion 2, NIO’s exposure to variability of returns in its investment in Weineng is insufficient to establish control under GAAP-based accounting.</li></ul><p><b>Challenging Grizzly’s Quantification of NIO’s Alleged Revenue and Profit Inflation</b></p><p>Grizzly believes NIO has inflated revenue and net income by “about 10% and 95%, respectively”, via its affiliation with Weineng. Grizzly’s calculations, as well as our skepticism, is outlined as follows:</p><p><b>1. Frontloaded Revenue via Battery Sales to Weineng</b></p><p><b>Grizzly’s accusation.</b>As discussed in the foregoing analysis, Grizzly identified that NIO has been recognizing battery revenues pertaining to BaaS upfront via its affiliation with Weineng. Instead of recognizing BaaS revenues over time when the service performance obligation is satisfied, NIO is able to recognize 100% of battery revenues sold to customers via BaaS subscriptions through the Weineng JV. Grizzly claims that this arrangement effectively allows NIO to pull forward seven years of BaaS revenue upfront.</p><p><b>Grizzly’s calculation of quantified impacts.</b>Considering vehicle purchase discounts ranging RMB 70,000 (70/75 kWh battery pack) to RMB 128,000 (100 kWh battery pack) upon buyer’s subscription to BaaS, Grizzly has taken the lower end of the range (i.e. RMB 70,000) as the proxy for battery pack revenues. Based on annual BaaS subscription fees at RMB 11,760 (RMB 980/mo.) for the 70 kWh battery pack, which yields a vehicle discount of RMB 70,000 with subscription to BaaS, Grizzly has assumed a BaaS revenue recognition timeline of about seven years (i.e. RMB 70,000 discount, divided by RMB 11,760 annual BaaS subscription fee, adjusted for inflation) – we consider this a reasonable assumption.</p><p>Now, as of September 30, 2021, a public regulatory filing by Weineng disclosed that it had 19,000 active BaaS subscribers. 18% of its subscription base were subscribed to the RMB 1,480/mo. 100 kWh battery pack, and 82% were subscribed to the RMB 980/mo. 70/75 kWh battery pack at the time.</p><p>Grizzly’s calculation of inflated revenues and income pertaining to NIO’s sale of 19,000 BaaS-related batteries to Weineng in the nine months ending September 30, 2021 is as follows:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/21e7d58b24ac2bde6344b4206ef9be8e\" tg-width=\"592\" tg-height=\"395\" referrerpolicy=\"no-referrer\"/><span>Grizzly&#39;s Computation of Inflated Revenue and Income Pertaining to Pulled Forward BaaS Sales (Grizzly Research)</span></p><p>As of the nine months ended September 30, 2021, NIO had generated RMB 2,796 million in revenues from the sale of batteries to Weineng (full year 2021 revenues generated from Weineng: RMB 4,138 million, 11% of total NIO 2021 revenue). Based on 19,000 active BaaS subscribers, and ownership of 40,053 battery packs owned as reported by Weineng as of September 30, 2021, Grizzly estimates that only 47% of the RMB 2,796 million in revenues generated from the sale of goods to Weineng are related to “real” BaaS sales. Essentially, Grizzly claims only RMB 1,326 million of RMB 2,796 million in sales of goods to Weineng recognized on NIO’s income statement in the nine months ended September 30, 2021 are related to real BaaS battery sales.</p><p>The RMB 1,326 million pertaining to 19,000 battery packs sold to Weineng for the number of active BaaS subscribers at the time is effectively the “upfront” revenue recognized by NIO, which should have been recognized over a course of seven years instead based on the estimated performance obligation timeline discussed in earlier sections. Without Weineng, NIO would have instead had to recognize BaaS revenues related to the 19,000 subscribers over time, which is equivalent to RMB 179 million in the nine month period ending September 30, 2021. This essentially means NIO had allegedly pulled forward RMB 1,147 million in revenues related to BaaS sales in the nine months ending September 30, 2021.</p><p>In the nine months ended September 30, 2021, NIO had reported total revenue of RMB 26,236 million and net losses of RMB 1,874 million. The RMB 1,147 million in pulled forward BaaS revenues represents 4% of total revenues recognized over the nine-month reporting period.</p><p>To generate the “adjusted” net income that NIO would have reported had Weineng never existed, Grizzly had removed RMB 1,147 million in pulled forward revenues pertaining to BaaS sales directly from actual reported net losses of RMB 1,874 million. This accordingly yields adjusted net losses of RMB 3,021 million for the nine months ending September 30, 2021 at NIO, or a variance of 61%.</p><p><b>Issue with Grizzly’s claim.</b>In Grizzly’s calculation of adjusted net losses had BaaS revenue never been pulled forward at NIO via its affiliation with Weineng, the short-seller did not add back costs of sales that NIO would have recognized when it sold the battery packs to Weineng and recorded the related revenue.</p><p>While profit margins on NIO’s battery pack sales to Weineng are not disclosed, Grizzly had used 20% as a proxy, which is “consistent with the margin of an entire vehicle [considering] batteries are a cost center for all vehicles”. Using the 20% profit margin proxy on 19,000 battery pack sales to Weineng totalling RMB 1,326 million in the nine months ending September 30, 2021, NIO would have recorded related cost of sales of RMB 1,060.9 million (i.e. 0.8% cost of revenues x RMB 1,326 million battery revenues recorded on the sale of 19,000 units to Weineng in the nine months ending September 30, 2021).</p><p>When Grizzly removed/pulled forward BaaS revenues of RMB 1,147 million from NIO’s actual net losses of RMB 1,874 million reported in the nine months ending September 30, 2021, Grizzly should have also added back related cost of sales totalling RMB 917.6 million in determining the adjusted net income reported.</p><p><b>Livy’s revised calculation of quantified impacts.</b></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/324a74d6eeeb60a4bd2da9251d4d6ed8\" tg-width=\"640\" tg-height=\"416\" referrerpolicy=\"no-referrer\"/><span>Livy&#39;s Computation of Revenue and Income Variances Pertaining to NIO&#39;s Alleged Frontloading of BaaS Sales (Author)</span></p><p>The above revised net income adjustment backs out alleged pulled forward BaaS revenues by NIO through its affiliation with Weineng from actual net losses reported by NIO in the nine months ending September 30, 2021. The orange-highlighted cells represent the incremental cost of sales pertaining to pulled forward BaaS revenues that should have been added back to adjusted net income in order to represent a fair representation of NIO’s adjusted net losses for the nine months ending September 30, 2021 if Weineng never existed and the EV maker had to recognize BaaS revenues over time. This adjustment accordingly reduces the variance of 61% from Grizzly’s calculation of adjusted net losses, to 12% – a material difference that, like Grizzly is accusing NIO of doing, misleads investors on the matter discussed.</p><p><b>2. Revenues from Oversupplied Batteries to Weineng</b></p><p><b>Grizzly’s accusation.</b>Based on NIO’s revenue recognition method on BaaS sales, the number of battery packs sold to Weineng should be equivalent to the number of vehicle buyers that have subscribed to BaaS at the time of purchase. Based on 19,000 active BaaS subscribers reported by Weineng as of September 30, 2021, it is easy to assume that NIO should have only sold 19,000 battery packs to Weineng in the nine months ending September 30, 2021 as well to comply with the EV maker’s revenue recognition method on BaaS sales outlined in its 2021 20F.</p><p>However, Weineng had reported ownership of 40,053 battery packs as of September 30, 2021, which exceeds its active subscriber base of 19,000 by 21,053 units. As such, Grizzly has accused NIO of intentionally overselling battery packs to Weineng to inflate revenues.</p><p>While the discrepancy is indeed a question for management, Grizzly had cited that there is no need for Weineng to hold that many additional battery packs, even for operational purposes. Grizzly had gone on to explain its field work done at NIO Power Swap stations to verify that there is no difference between BaaS battery packs owned by Weineng and battery packs used in swap stations owned by NIO. However, we believe the additional field work is a moot point, considering NIO Power Swap operations are not related to Weineng. Weineng only facilitates NIO’s BaaS battery lending business, and nothing else – Grizzly did not even have to go out of its way to check on NIO’s Power Swap stations and hold conversations with sales staff at NIO’s car centers.</p><p><b>Livy’s response.</b>While the number of battery packs owned by Weineng should essentially be equivalent to the number of active BaaS subscribers, there is a possibility that a total of 40,053 NIO vehicle sales between 2020 when BaaS was established and September 30, 2021 had subscribed to BaaS. Perhaps, as of reporting date on September 30, 2021, there were 21,053 BaaS subscribers that have halted monthly subscriptions, which is not surprising given the third quarter is not a typical driving season, and there is a possibility that these NIO vehicle owners did not need to use their vehicles during the period.</p><p>Grizzly has also supported its claim that NIO oversupplied battery packs to Weineng to intentionally inflate revenues by saying that Weineng has no storage facility to store its 21,053 excess battery packs as of September 30, 2021. However, we do not find this surprising, as BaaS subscribers that have halted monthly subscriptions might be holding onto the emptied battery packs on consignment or have returned them to a NIO servicing center where NIO has held onto these Weineng-owned battery packs on consignment. The lack of battery pack storage facility owned by Weineng does not conclude that its ownership of the excess battery packs is fraudulent and made up.</p><p>There can be many reasons why a discrepancy exists between the number of active BaaS subscribers and battery packs owned by Weineng at the end of a reporting period. The above are just two assumptions that could invalidate Grizzly’s accusation (which is also an assumption). The real answer to the discrepancy can only be explained by NIO and Weineng management.</p><p><b>Grizzly’s calculation of quantified impacts.</b>In determining the inflated revenue and earnings specific to the allegedly oversupplied battery packs from NIO to Weineng, Grizzly had performed the following calculations:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a2497da8272eec2b6020c07b7ee06b1f\" tg-width=\"580\" tg-height=\"420\" referrerpolicy=\"no-referrer\"/><span>Grizzly&#39;s Computation of Revenue and Net Income Variances Pertaining to Oversupplied Batteries (Grizzly Research)</span></p><p>In deriving the inflated revenues related to the allegedly oversupplied battery packs, Grizzly had determined the percentage of battery packs owned by Weineng as of September 30, 2021 that were in excess to its active subscriber base as 53% (i.e. 21,053 excess battery packs, divided by 40,053 battery packs owned by Weineng as of September 30, 2021). The percentage was applied to total revenue recognized by NIO pertaining to the sale of battery packs to Weineng in the nine months ending September 30, 2021, resulting in oversold battery revenues of RMB 1,470 million (i.e. 53% oversold batteries x RMB 2,796 million in related party revenues from Weineng recorded by NIO for the nine months ending September 30, 2021).</p><p>In the nine months ended September 30, 2021, NIO had reported total revenue of RMB 26,236 million and net losses of RMB 1,874 million. The RMB 1,470 million in oversold battery revenue represents 6% of total NIO revenues recognized over the nine-month reporting period.</p><p>Considering Grizzly’s 20% profit margin assumption on battery pack sales as discussed in earlier sections, the oversold battery packs to Weineng would have generated net income of RMB 294 million in the nine months ending September 30, 2021. As such, backing out RMB 294 million in overstated profits back to NIO’s actual reported net losses of RMB 1,874 million in the nine-month period ending September 30, 2021 would have yield adjusted net losses of RMB 2,168 million, representing a variance of 16%.</p><p>We have no issues with this calculation performed by Grizzly, other than concerns over the short-seller’s claims that these 20,053 battery packs were intentionally “oversold” by NIO to Weineng to artificially boost revenues.</p><p><b>3. Shifting Depreciation Costs</b></p><p><b>Grizzly’s Accusations.</b>Grizzly has accused NIO of indirectly shifting depreciation costs on the battery packs sold to Weineng, saving the EV maker north of RMB 336 million in depreciation expense on an annual basis.</p><p>Specifically, Grizzly has assumed a 20% profit margin on NIO’s battery sales totalling RMB 2,796 million generated from Weineng in the nine months ending September 30, 2021. This represents battery assets valued at a cost basis of RMB 2.25 billion (i.e. 80% cost x RMB 2,796 in battery sales to Weineng, adjusted for minor rounding differences) removed from the EV maker’s balance sheet over the same period.</p><p>Based on the five to eight years useful life attributable to equipment, including battery packs, used in NIO’s Power Swap business as disclosed in its 2021 20F, Grizzly has assumed an annual depreciation rate of about 15% on the battery packs sold to Weineng and removed from NIO’s balance sheet in the nine months ending September 30, 2021. This is consistent with the assumed BaaS revenue recognition timeline of about seven years as discussed in earlier sections. As such, Grizzly has accused NIO of avoiding depreciation costs of RMB 336 million (i.e. 15% battery depreciation rate x RMB 2,796 million in battery pack sales to Weineng) in the nine months ending September 30, 2021. The short-seller has also alluded to the RMB 336 million as a proxy for annual depreciation costs that NIO has avoided via its arrangement with Weineng.</p><p><b>Issue with Grizzly’s claim.</b>There are two folds to this situation:</p><p><b>1. BaaS Business Model:</b>Under the BaaS business model, the battery packs are considered equipment used in facilitating a service business. As such, the related battery packs would be subjected to depreciation over its useful life. In NIO’s case, if Weineng never existed and the EV maker consolidates its BaaS business, NIO would have had to recognized BaaS revenues pertaining to the 19,000 battery packs that Grizzly has attributed to the BaaS business over seven years, and accordingly record depreciation costs on these battery packs as well over their useful lives of about seven years. As mentioned in earlier sections, the related journal entries under the BaaS business model is as follows:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0e89611dda7a7e83881997628fe7aae3\" tg-width=\"640\" tg-height=\"187\" referrerpolicy=\"no-referrer\"/><span>Journal Entries for BaaS Business Model (Author)</span></p><p><b>2. Battery Sales Business Model:</b>in the current situation where NIO has sold the battery packs to Weineng, the battery packs are considered inventory to NIO. There is no depreciation costs related to inventory under GAAP-based accounting. Instead, NIO needs to record the costs of this inventory when they are removed from its balance sheet once the sale is recognized. As mentioned in earlier sections, the related journal entries under the battery sale business model is as follows:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2203faf29e5b271342335935df358d86\" tg-width=\"389\" tg-height=\"208\" referrerpolicy=\"no-referrer\"/><span>Journal Entries for Battery Sales Business Model (Author)</span></p><p>Now, in NIO’s current actual situation, it is engaged in a battery sales business model under its performance obligation to Weineng, while Weineng is engaged in a BaaS business model under its performance obligation to BaaS subscribers.</p><p>As discussed in our first challenge to Grizzly’s calculations pertaining to pulled forward revenue on BaaS battery sales to Weineng, NIO would have recorded costs of sales pertaining to the sold battery inventory when it recognized the related revenues. And this cost of sales number, based on a 20% profit margin assumption consistent with that used by Grizzly, would have accounted for the costs of battery inventory removed from NIO’s balance sheet upon completion of the sale to Weineng. This is consistent with Grizzly’s own calculation pertaining to profit margins on the battery packs that it alleges NIO had oversupplied to Weineng, which is inclusive of cost of sales related to written off inventory incurred by NIO upon recognition of related revenues.</p><p>If NIO was engaged in the BaaS business model itself, without the intervention of Weineng, it would have recognized depreciation at a rate of 15% per year on the battery packs. However, under the upfront sale of related battery packs to Weineng, NIO would have recorded related cost of sales at an upfront rate of 80% as well. So basically, instead of recording revenues and depreciation costs on battery packs over time, NIO essentially recorded revenues and battery inventory costs upfront under its current arrangement with Weineng.</p><p><b>Grizzly’s calculation of quantified impacts.</b>Grizzly’s accusation that NIO has overstated revenues and earnings by 10% and 95%, respectively, through its affiliation with Weineng is calculated as follows:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/96f972c8d488406cd690b0672265e62b\" tg-width=\"576\" tg-height=\"498\" referrerpolicy=\"no-referrer\"/><span>Grizzly&#39;s Computation of Total Revenue and Income Inflation (Grizzly Research)</span></p><p>As discussed in earlier sections, NIO’s pulled forward BaaS revenues and inflated battery sales revenues via its affiliation with Weineng represent 4% and 6% of its total revenues, respectively, recognized in the nine months ending September 30, 2021. This represents the 10% in inflated NIO revenues as Grizzly has outlined in the above calculation.</p><p><b>Livy’s revised calculation of quantified impacts.</b>While we have yet to reconcile the RMB 1,777 million in total inflated net income that Grizzly has accused NIO of recognizing (please let us know in comments if you know), we believe the 95% variance identified by Grizzly is not a fair presentation of the quantified impact of its core short thesis.</p><p>Our calculation of the quantified impact pertaining to Grizzly’s accusations that NIO has inflated revenue and earnings through (1) pulling forward BaaS sales, and (2) oversupplying batteries to Weineng, is as follows:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/1ffe9833bb562f66e5365e077d7741d4\" tg-width=\"640\" tg-height=\"396\" referrerpolicy=\"no-referrer\"/><span>Livy&#39;s Computation of Alleged Overstatements Related to Alleged Frontloading of BaaS Revenue (Author)</span></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/230a54833c34b3a9920a03524c28e960\" tg-width=\"640\" tg-height=\"361\" referrerpolicy=\"no-referrer\"/><span>Livy&#39;s Computation of Alleged Overstatements Pertaining to Alleged Overselling of Battery Supplies (Author)</span></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/ccf9a3a0482b46cee102e66d5137113f\" tg-width=\"640\" tg-height=\"220\" referrerpolicy=\"no-referrer\"/><span>Livy&#39;s Computation of Alleged Revenue Overstatement (Author)</span></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0c7ec5a61d7fd491aec81d9a48a92020\" tg-width=\"640\" tg-height=\"188\" referrerpolicy=\"no-referrer\"/><span>Livy&#39;s Computation of Alleged Overstatement in Net Income (Author)</span></p><p>Under Grizzly’s accusations of inflated revenue and earnings by NIO through its affiliation with Weineng, if found valid (which we remain skeptical of), NIO would have overstated net losses in the nine months ending September 30, 2021 by 28% instead of the 95% that Grizzly alleges – a material difference that again misleads investors on the estimated quantified impact pertaining to the accusations claimed by the short-seller. The net income variance of RMB 523 million ($78 million) found in our calculation is also immaterial (&lt; 1%) based on NIO’s market value of $58.38 billion as of September 30, 2021 and NIO’s market value of approximately $35 billion today.</p><p><b>Final Thoughts</b></p><p>As discussed in the introduction of this analysis, Grizzly had also touched on things like NIO CEO Li’s association with fraudulent personnel, the pledge of NIO User Trust to UBS AG, and conflict of interests to further support its argument that NIO is engaged in fraudulent financial reporting. However, these are groundless allegations that have yet to be substantiated to infer Li is committing fraud via NIO’s operations. While investors should always exercise professional skepticism on publicly disclosed information in regulatory filings when making investment decisions, the same skepticism should also be placed on external claims – such as those by the short-seller, commentary by external sources, and/or even commentary herein – especially if they argue that correlation = causation (e.g. Grizzly’s method in inferring that fraud at NIO is substantiated given “dirt” it has dug up on Li’s past).</p><p>While we agree that there are some good takeaways from the short-seller report that may require further clarification from management, it is important to recognize and acknowledge that a lot of it might also be misleading – or in the words of Grizzly, “exaggerated”. This is also consistent with NIO’s stock performance during Tuesday and Wednesday’s session following release of the short-seller report. The stock has largely moved in consistency with the ongoing market rout, and broad-based selloff across the EV sector, with no extreme deviation due to the negative headline from Grizzly, which indicates that market participants, especially significant shareholders in NIO, are still digesting the latest external allegations.</p><p>At the end of the day, NIO remains one of the most viable EV businesses in the emerging sector, with continued demand for its vehicles to support further growth over the long-run. Unlike some of the upstarts in the increasingly competitive EV landscape that have been accused of fraud, such as Nikola (NKLA), Lordstown Motors (RIDE), and Faraday Future (FFIE), NIO already operates a global business with a substantiated vehicle order book to support the bulk of its top- and bottom-line expansion, which continues to support its positive valuation prospects ahead.</p><p>This article was written by Livy Investment Research</p></body></html>","source":"seekingalpha","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>NIO: Questions And Challenges To The Grizzly Short-Seller Report</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; 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}\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\">\nNIO: Questions And Challenges To The Grizzly Short-Seller Report\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-06-30 12:01 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4521053-nio-questions-and-challenges-to-the-grizzly-short-seller-report?source=content_type%3Areact%7Cfirst_level_url%3Ahome%7Csection%3Aportfolio%7Csection_asset%3Aheadlines%7Cline%3A2><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryShort-seller Grizzly Research has released a report outlining findings of alleged fraud by NIO on Tuesday evening.The report attempted to outline how NIO, through an unconsolidated entity, is ...</p>\n\n<a href=\"https://seekingalpha.com/article/4521053-nio-questions-and-challenges-to-the-grizzly-short-seller-report?source=content_type%3Areact%7Cfirst_level_url%3Ahome%7Csection%3Aportfolio%7Csection_asset%3Aheadlines%7Cline%3A2\">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","NIO.SI":"蔚来","09866":"蔚来-SW"},"source_url":"https://seekingalpha.com/article/4521053-nio-questions-and-challenges-to-the-grizzly-short-seller-report?source=content_type%3Areact%7Cfirst_level_url%3Ahome%7Csection%3Aportfolio%7Csection_asset%3Aheadlines%7Cline%3A2","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1121505043","content_text":"SummaryShort-seller Grizzly Research has released a report outlining findings of alleged fraud by NIO on Tuesday evening.The report attempted to outline how NIO, through an unconsolidated entity, is falsely inflating revenue and net income pertaining to its BaaS business.The report also accused CEO Bin Li of association with fraudulent activities in the past. The information was largely used as support for Grizzly's claims of financial manipulation at NIO.However, we believe some of the information reported by Grizzly have been exaggerated to support its short bias against NIO. We also question the validity of some of the quantified impacts that Grizzly is claiming against NIO's BaaS operations.Drew Angerer/Getty Images NewsGrizzly Research (\"Grizzly\") has released a short-seller report on NIO (NYSE:NIO) Tuesday morning, citing the Chinese electric vehicle (“EV”) company has engaged in the exaggeration of revenue and profitability via aggressive accounting methods and fraudulent means. In addition to outlining the allegedmeasures NIO has taken to falsely inflate its top- and bottom-line since 2020, Grizzly has also gathered extensive research in an attempt to character-assassinate NIO CEO Bin Li in order to “dot the i’s and cross the t’s” in its argument that the three core elements of fraud – opportunity, incentive and rationalization – exist in this situation for the EV maker.While some of the findings raised in the short-seller report may raise questions that only NIO management can answer, there are also questionable and groundless arguments made by Grizzly that could significantly mislead and deceive existing and potential investors in the EV stock. The following analysis will focus on an overview of the short-seller’s core claim against NIO – namely, false inflation of revenue and net income via aggressive accounting and potentially fraudulent means – and provide a walkthrough of questions / challenges we have over the validity of some of those claims.Accounting Crash Course: NIO’s BaaS Revenue Recognition MethodThrough publicly disclosed information within NIO’s audited annual report, Grizzly had identified that NIO is frontloading and inflating revenue recognition pertaining to its battery-as-a-service (“BaaS”) sales via an unconsolidated related party.In 2020, NIO, alongside an external consortium of investors that consist of EV battery maker CATL, Hubei Science Technology Investment Group, and a subsidiary of Fuotai Junan International Holdings Limited, have together created the joint venture “Wuhan Weineng Battery Asset Co., Ltd.,” (“Weineng”). Weineng was established in 2020, the same time when NIO’s battery lending service BaaS was introduced.Under BaaS, NIO customers are eligible for a one-time discount of up to RMB 128,000 ($19,133) on the vehicle purchase if they opt for the battery lending subscription program instead of buying the battery with the vehicle upfront. This strategy has been an effective mean in fuelling the adoption of NIO EVs in China, especially with additional government subsidies for purchases that are compatible with battery swapping technology. All sales and costs pertaining to BaaS are managed by Weineng.Now, the Weineng joint venture, in which NIO holds a 19.8% equity interest in, has been accounted for as an “equity-accounted investment” on the EV maker’s financial statements, given the definition of control under GAAP-based accounting has not been met (further discussed in later sections). Under GAAP-based accounting for related party transactions, “intragroup related party transactions and outstanding balances are eliminated, except for those between an investment entity and its subsidiaries measured at fair value through profit or loss, in the preparation of consolidated financial statements of the group”:GAAP Rules on Related Party Disclosures (IAS)Based on NIO’s disclosures within its audited annual report on its revenue recognition method pertaining to BaaS sales, the EV maker sells its battery packs to Weineng on a “back-to-back” basis when a vehicle is sold to a customer subscribed to BaaS:NIO Revenue Recognition Policy on BaaS Sales (NIO 2021 20F)In compliance with GAAP-based accounting for revenue recognition, a sale is reported to the income statement when a performance obligation is satisfied. Under NIO’s affiliation with Weineng, NIO sells Weineng a battery pack when a customer buys a vehicle with BaaS subscription. The performance obligation here is that NIO needs to provide a battery pack to Weineng, and once this is satisfied, NIO is permitted to recognize revenue on the battery sale based on a pre-contracted transaction price for the performance obligation. For NIO, the battery sold would have been previously considered as inventory. Following the recognition of the battery sale, NIO would have also recorded cost of sales pertaining to removing the battery from its inventory balance on the balance sheet:Journal Entries for Battery Sales Business Model (Author)In Weineng’s case, however, its performance obligation to customers is the provision of battery lending services on a monthly or annual basis, depending on the subscription option. As such, Weineng can only recognize monthly / annual BaaS revenue over time when it satisfies its battery lending obligation to customers. Weineng would also have to record depreciation costs over the useful life of its batteries, which are considered property, plant and equipment used in facilitating its service business:Journal Entries for BaaS Business Model (Author)This arrangement essentially allows NIO to recognize 100% of revenues pertaining to the battery pack sold to Weineng upfront upon selling a vehicle booked on BaaS on a one-for-one basis, instead of recognizing BaaS revenue and related depreciation costs on the batteries used in the BaaS business over time. The disclosed BaaS revenue recognition method for NIO also infers that the number of battery packs sold to Weineng should be equivalent to the number of BaaS subscribers as of period-end. BaaS revenues and related costs of sales (e.g. depreciation costs on batteries) recognized over time are instead in the books of Weineng, in which NIO accounts for on its balance sheet as an equity-accounted investment.Because Weineng is an equity-accounted investment and not a consolidated entity in which NIO controls under the definition set out by GAAP-based accounting, NIO is not required to perform intragroup eliminations pertaining to the related party transaction. Instead, it is required to disclose the relationship, as well as the related amounts if material. This information is disclosed in NIO’s 2021 20 Funder “Note 26. Related Party Balances and Transactions”. Revenue and income generated by Weineng are accounted for in NIO’s financial statements as “share of (loss) / income of equity investees” pro-rated for its non-controlling interest.Grizzly’s Core Short ThesisGrizzly alleges the move is a fraudulent measure taken by NIO to “exaggerate revenue and profitability”. The short-seller has accused NIO of using the accounting “loophole” to frontload battery revenues pertaining to BaaS that should have been recognized over a course of about seven years (i.e. battery discount on BaaS vehicle purchase, divided by annual BaaS subscription fee).In addition to frontloading revenue recognition on BaaS sales, Grizzly has also identified a discrepancy between the number of active BaaS subscribers and battery packs owned by Weineng as of September 30, 2021. Grizzly found thatWeineng had ownership of 40,053 battery packs as of September 30, 2021, but only had 19,000 active BaaS subscribers during the period, which is inconsistent with NIO’s claims that it only records battery sales to Weineng on a back-to-back basis with BaaS vehicle sales. Grizzly has attributed the discrepancy as NIO’s way of artificially inflating revenues by selling more battery packs to Weineng than it needs to fulfil BaaS performance obligations.In order to support its claim that NIO is defrauding investors via the unconsolidated related party, Grizzly has also gathered additional research in an attempt to support the three key elements of the fraudulent triangle:Opportunity:As mentioned in the accounting overview section, the ownership structure between NIO and Weineng is accounted for as an equity-accounted investment, which allows NIO to bypass related party transaction eliminations on its financial statements. This accordingly provides an opportunity for NIO to artificially inflate its revenues at the group level by recording sales to the equity-accounted subsidiary, without the need to back it out at period end. Under GAAP-based accounting rules on related party transactions, NIO is required to disclose material details to the relationship, in which it has complied with.The organizational structure also provides NIO an ability to recognize BaaS revenues upfront, instead of over an extended period of time given the difference in performance obligation it owes toWeinengcompared to thoseWeineng owes to BaaS subscribers. Grizzly also claims the method has allowed NIO to bypass depreciation costs on battery assets to the tune of RMB 336 million per year.Incentive:Grizzly has gone through extensive measures to dig up evidence to support NIO has a valid incentive for exaggerating its revenue and profitability. Citing an agreement between NIO and a state-backed consortium which has invested in a wholly-owned subsidiary “NIO China”, which requires NIO to redeem the investment upon failure in meeting pre-established performance metrics, such as achieving revenues of RMB 120 billion by 2024. However, the publicly disclosed information per NIO’s regulatory filings does not specify whether the RMB 120 billion revenue performance metric is required on an annual basis or on a cumulative basis between the time at which the agreement was forged with the state-backed investment consortium and 2024.Grizzly has also inferred incentive for NIO to exaggerate its top- and bottom-line as a mean to pretty its valuation prospects, and attract investors from the public market.Rationalization:The short-seller report lacks support for how NIO tried to rationalize the alleged fraudulent reporting behaviour. However, Grizzly has proceeded to gather evidence to bolster its claim of why the likelihood of fraud at NIO is high. These include findings about NIO CEO Li’s past association with personnel that have been previously linked to high-profile fraudulent financial reporting cases like Luckin Coffee(OTCPK:LKNCY). Grizzly has also alluded to questionable behaviour by NIO CEO Li, such as pledging a NIO-affiliated subsidiary, “NIO User Trust”, in which Li personally controls to UBS AG without directly addressing the matter to shareholders. While these findings may warrant clarification from management, there is insufficient ground to warrant a fraudulent sentence to the company.NIO management has also refuted Grizzly’s claims, saying allegations outlined in the report are “without merit and contains numerous errors, unsupported speculations and misleading conclusions and interpretations”, and has committed to bolstering public disclosures going forward to protect shareholders’ interests. Nowhere has the company tried to outright rationalize fraudulent reporting.Challenging Grizzly’s Conclusion on “Control” Established by NIO Over WeinengIn addition to character assassination on Li to support its claims for fraudulent reporting behaviour at NIO, Grizzly has also attempted to conclude NIO’s control over Weineng. As mentioned in earlier sections, if NIO effectively “controls” Weineng, it would have to consolidate the investment and eliminate any earnings recorded via related party transactions.First, Grizzly has identified “conflicting disclosure” between NIO’s claim that it has “significant influence” over Weineng in one place, and NIO’s claim that it only has “limited control over the business operations” ofWeinengin another place within a same regulatory filing. However, the words “significant influence” and “control” used within NIO’s regulatory filings are defined differently under GAAP-based accounting rules from general definitions of power that everyday investors are familiar with.Significant influence is defined as “the power to participate in the financial and operating policy decisions of the investee without the power to control or jointly control those policies” under GAAP-based accounting. Significantly influence is typically established when an “entity holds, directly or indirectly, 20% or more of voting power of the investee”. NIO’s 19.8% equity interest in Weineng is sufficient to presume its “significant influence” over the investment:GAAP Rules on Investments in Associates and Joint Ventures (IAS)Pointing to our earlier reference to the definition of control established in GAAP-based accounting, the acquiring party only establishes “control” over the acquired party if it demonstrates three primary elements:1. “Power” over the acquired entity, which is defined under GAAP as a substantive right exercised by an acquirer over the acquiree for non-protective benefits (e.g. exercising rights without the need for breach of contract or majority investor support). Based on publicly disclosed information in NIO’s regulatory filings, it only holds one of nine board seats on Weineng. There is also no mention of voting agreements that would pass on majority board and/or owner voting rights to NIO. With one of nine board seats, and a 19.8% equity interest, NIO does not exhibit power over Weineng to establish control.2. Exposure tovariable returnsfrom the acquiree based on the acquirer’s involvement. NIO does not generate additional fees from Weineng based on Weineng’s performance. NIO is only exposed to Weineng’s earnings through its equity-accounted share of the investment.As for the acquirer’s involvement in interfering with returns generated from the acquiree, Grizzly has pointed to the installation of two existing NIO executives to Weineng in management roles that include “Legal Representative and Chairman” and “General Manager and Director”. However, considering NIO’s significant influence over Weineng as defined under GAAP rules explained earlier, it is not unusual for the two parties to share employees or for NIO to “participate in the financial and operating policy decisions” of Weineng through the two shared employees. As such, NIO can account for its investment inWeinengas an equity-accounted investment, as long as “control” is not established even if it has installed employees at Weineng. Based on NIO’s failure to meet criterion 1 “power”, it already fails to establish control under GAAP rules over Weineng based on the existing ownership and voting structure disclosed in regulatory filings.Grizzly has also alluded to the installation of two NIO executives in the daily operations of Weineng as a “major conflict of interest”. However, the auditor’s report per NIO’s audited 2021 20F states that “the company has maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established inInternal Control – Integrated Framework(2013) issued by the COSO”. The COSO framework requires that internal controls address segregation of duty requirements to ensure fair presentation of financial information without material misstatements whether due to error or fraud. As such, it is reasonable to believe that segregation of duty controls in place pertaining to the two executives’ roles in both NIO and Weineng have been tested as effective as of the reporting date.3. The acquiring party is aprincipalin the transaction, and not an agent. Under GAAP-based accounting, an agent is “primarily engaged to act on behalf and for the benefit of another party…[and] does not control an investee when it exercises decision-making rights delegated to it”. In determining whether NIO is an agent over Weineng, the i) scope of NIO’s decision-making authority over Weineng, ii) the rights held by other investors in Weineng, iii) the remuneration in which NIO is entitled to in its affiliation with Weineng, and iv) NIO’s exposure to variability of returns from its interest in Weineng must be considered:Based on the foregoing analysis, we know that NIO’s sole decision-making authority over Weineng is limited given it only holds 19.8% equity interest with one in nine board seats in the joint venture. The two NIO executives installed in the daily operations of Weineng also do not exhibit characteristics of sole control over the joint ventures’ business.The remainder of the investment consortium over Weineng holds the remaining eight of nine board seats, and 80.2% equity interest in the joint venture. There have also been no mention of signed-over voting rights by the investment consortium to NIO in publicly disclosed information that would give NIO control over Weineng.In addition to battery sales, NIO is also entitled to service revenue earned from Weineng through service agreements. NIO earns revenue for providing “battery packmonitoring, maintenance, upgrade, replacement, IT system support, etc.” to Weineng via monthly service charges. As of the reporting year ended December 31, 2021, service revenues pertaining to the service agreements between NIO and Weineng were immaterial according to disclosures in “Note 2. Summary of Significant Accounting Policies”, section(r) Revenue recognitionin the 2021 20F.As discussed in the control assessment under criterion 2, NIO’s exposure to variability of returns in its investment in Weineng is insufficient to establish control under GAAP-based accounting.Challenging Grizzly’s Quantification of NIO’s Alleged Revenue and Profit InflationGrizzly believes NIO has inflated revenue and net income by “about 10% and 95%, respectively”, via its affiliation with Weineng. Grizzly’s calculations, as well as our skepticism, is outlined as follows:1. Frontloaded Revenue via Battery Sales to WeinengGrizzly’s accusation.As discussed in the foregoing analysis, Grizzly identified that NIO has been recognizing battery revenues pertaining to BaaS upfront via its affiliation with Weineng. Instead of recognizing BaaS revenues over time when the service performance obligation is satisfied, NIO is able to recognize 100% of battery revenues sold to customers via BaaS subscriptions through the Weineng JV. Grizzly claims that this arrangement effectively allows NIO to pull forward seven years of BaaS revenue upfront.Grizzly’s calculation of quantified impacts.Considering vehicle purchase discounts ranging RMB 70,000 (70/75 kWh battery pack) to RMB 128,000 (100 kWh battery pack) upon buyer’s subscription to BaaS, Grizzly has taken the lower end of the range (i.e. RMB 70,000) as the proxy for battery pack revenues. Based on annual BaaS subscription fees at RMB 11,760 (RMB 980/mo.) for the 70 kWh battery pack, which yields a vehicle discount of RMB 70,000 with subscription to BaaS, Grizzly has assumed a BaaS revenue recognition timeline of about seven years (i.e. RMB 70,000 discount, divided by RMB 11,760 annual BaaS subscription fee, adjusted for inflation) – we consider this a reasonable assumption.Now, as of September 30, 2021, a public regulatory filing by Weineng disclosed that it had 19,000 active BaaS subscribers. 18% of its subscription base were subscribed to the RMB 1,480/mo. 100 kWh battery pack, and 82% were subscribed to the RMB 980/mo. 70/75 kWh battery pack at the time.Grizzly’s calculation of inflated revenues and income pertaining to NIO’s sale of 19,000 BaaS-related batteries to Weineng in the nine months ending September 30, 2021 is as follows:Grizzly's Computation of Inflated Revenue and Income Pertaining to Pulled Forward BaaS Sales (Grizzly Research)As of the nine months ended September 30, 2021, NIO had generated RMB 2,796 million in revenues from the sale of batteries to Weineng (full year 2021 revenues generated from Weineng: RMB 4,138 million, 11% of total NIO 2021 revenue). Based on 19,000 active BaaS subscribers, and ownership of 40,053 battery packs owned as reported by Weineng as of September 30, 2021, Grizzly estimates that only 47% of the RMB 2,796 million in revenues generated from the sale of goods to Weineng are related to “real” BaaS sales. Essentially, Grizzly claims only RMB 1,326 million of RMB 2,796 million in sales of goods to Weineng recognized on NIO’s income statement in the nine months ended September 30, 2021 are related to real BaaS battery sales.The RMB 1,326 million pertaining to 19,000 battery packs sold to Weineng for the number of active BaaS subscribers at the time is effectively the “upfront” revenue recognized by NIO, which should have been recognized over a course of seven years instead based on the estimated performance obligation timeline discussed in earlier sections. Without Weineng, NIO would have instead had to recognize BaaS revenues related to the 19,000 subscribers over time, which is equivalent to RMB 179 million in the nine month period ending September 30, 2021. This essentially means NIO had allegedly pulled forward RMB 1,147 million in revenues related to BaaS sales in the nine months ending September 30, 2021.In the nine months ended September 30, 2021, NIO had reported total revenue of RMB 26,236 million and net losses of RMB 1,874 million. The RMB 1,147 million in pulled forward BaaS revenues represents 4% of total revenues recognized over the nine-month reporting period.To generate the “adjusted” net income that NIO would have reported had Weineng never existed, Grizzly had removed RMB 1,147 million in pulled forward revenues pertaining to BaaS sales directly from actual reported net losses of RMB 1,874 million. This accordingly yields adjusted net losses of RMB 3,021 million for the nine months ending September 30, 2021 at NIO, or a variance of 61%.Issue with Grizzly’s claim.In Grizzly’s calculation of adjusted net losses had BaaS revenue never been pulled forward at NIO via its affiliation with Weineng, the short-seller did not add back costs of sales that NIO would have recognized when it sold the battery packs to Weineng and recorded the related revenue.While profit margins on NIO’s battery pack sales to Weineng are not disclosed, Grizzly had used 20% as a proxy, which is “consistent with the margin of an entire vehicle [considering] batteries are a cost center for all vehicles”. Using the 20% profit margin proxy on 19,000 battery pack sales to Weineng totalling RMB 1,326 million in the nine months ending September 30, 2021, NIO would have recorded related cost of sales of RMB 1,060.9 million (i.e. 0.8% cost of revenues x RMB 1,326 million battery revenues recorded on the sale of 19,000 units to Weineng in the nine months ending September 30, 2021).When Grizzly removed/pulled forward BaaS revenues of RMB 1,147 million from NIO’s actual net losses of RMB 1,874 million reported in the nine months ending September 30, 2021, Grizzly should have also added back related cost of sales totalling RMB 917.6 million in determining the adjusted net income reported.Livy’s revised calculation of quantified impacts.Livy's Computation of Revenue and Income Variances Pertaining to NIO's Alleged Frontloading of BaaS Sales (Author)The above revised net income adjustment backs out alleged pulled forward BaaS revenues by NIO through its affiliation with Weineng from actual net losses reported by NIO in the nine months ending September 30, 2021. The orange-highlighted cells represent the incremental cost of sales pertaining to pulled forward BaaS revenues that should have been added back to adjusted net income in order to represent a fair representation of NIO’s adjusted net losses for the nine months ending September 30, 2021 if Weineng never existed and the EV maker had to recognize BaaS revenues over time. This adjustment accordingly reduces the variance of 61% from Grizzly’s calculation of adjusted net losses, to 12% – a material difference that, like Grizzly is accusing NIO of doing, misleads investors on the matter discussed.2. Revenues from Oversupplied Batteries to WeinengGrizzly’s accusation.Based on NIO’s revenue recognition method on BaaS sales, the number of battery packs sold to Weineng should be equivalent to the number of vehicle buyers that have subscribed to BaaS at the time of purchase. Based on 19,000 active BaaS subscribers reported by Weineng as of September 30, 2021, it is easy to assume that NIO should have only sold 19,000 battery packs to Weineng in the nine months ending September 30, 2021 as well to comply with the EV maker’s revenue recognition method on BaaS sales outlined in its 2021 20F.However, Weineng had reported ownership of 40,053 battery packs as of September 30, 2021, which exceeds its active subscriber base of 19,000 by 21,053 units. As such, Grizzly has accused NIO of intentionally overselling battery packs to Weineng to inflate revenues.While the discrepancy is indeed a question for management, Grizzly had cited that there is no need for Weineng to hold that many additional battery packs, even for operational purposes. Grizzly had gone on to explain its field work done at NIO Power Swap stations to verify that there is no difference between BaaS battery packs owned by Weineng and battery packs used in swap stations owned by NIO. However, we believe the additional field work is a moot point, considering NIO Power Swap operations are not related to Weineng. Weineng only facilitates NIO’s BaaS battery lending business, and nothing else – Grizzly did not even have to go out of its way to check on NIO’s Power Swap stations and hold conversations with sales staff at NIO’s car centers.Livy’s response.While the number of battery packs owned by Weineng should essentially be equivalent to the number of active BaaS subscribers, there is a possibility that a total of 40,053 NIO vehicle sales between 2020 when BaaS was established and September 30, 2021 had subscribed to BaaS. Perhaps, as of reporting date on September 30, 2021, there were 21,053 BaaS subscribers that have halted monthly subscriptions, which is not surprising given the third quarter is not a typical driving season, and there is a possibility that these NIO vehicle owners did not need to use their vehicles during the period.Grizzly has also supported its claim that NIO oversupplied battery packs to Weineng to intentionally inflate revenues by saying that Weineng has no storage facility to store its 21,053 excess battery packs as of September 30, 2021. However, we do not find this surprising, as BaaS subscribers that have halted monthly subscriptions might be holding onto the emptied battery packs on consignment or have returned them to a NIO servicing center where NIO has held onto these Weineng-owned battery packs on consignment. The lack of battery pack storage facility owned by Weineng does not conclude that its ownership of the excess battery packs is fraudulent and made up.There can be many reasons why a discrepancy exists between the number of active BaaS subscribers and battery packs owned by Weineng at the end of a reporting period. The above are just two assumptions that could invalidate Grizzly’s accusation (which is also an assumption). The real answer to the discrepancy can only be explained by NIO and Weineng management.Grizzly’s calculation of quantified impacts.In determining the inflated revenue and earnings specific to the allegedly oversupplied battery packs from NIO to Weineng, Grizzly had performed the following calculations:Grizzly's Computation of Revenue and Net Income Variances Pertaining to Oversupplied Batteries (Grizzly Research)In deriving the inflated revenues related to the allegedly oversupplied battery packs, Grizzly had determined the percentage of battery packs owned by Weineng as of September 30, 2021 that were in excess to its active subscriber base as 53% (i.e. 21,053 excess battery packs, divided by 40,053 battery packs owned by Weineng as of September 30, 2021). The percentage was applied to total revenue recognized by NIO pertaining to the sale of battery packs to Weineng in the nine months ending September 30, 2021, resulting in oversold battery revenues of RMB 1,470 million (i.e. 53% oversold batteries x RMB 2,796 million in related party revenues from Weineng recorded by NIO for the nine months ending September 30, 2021).In the nine months ended September 30, 2021, NIO had reported total revenue of RMB 26,236 million and net losses of RMB 1,874 million. The RMB 1,470 million in oversold battery revenue represents 6% of total NIO revenues recognized over the nine-month reporting period.Considering Grizzly’s 20% profit margin assumption on battery pack sales as discussed in earlier sections, the oversold battery packs to Weineng would have generated net income of RMB 294 million in the nine months ending September 30, 2021. As such, backing out RMB 294 million in overstated profits back to NIO’s actual reported net losses of RMB 1,874 million in the nine-month period ending September 30, 2021 would have yield adjusted net losses of RMB 2,168 million, representing a variance of 16%.We have no issues with this calculation performed by Grizzly, other than concerns over the short-seller’s claims that these 20,053 battery packs were intentionally “oversold” by NIO to Weineng to artificially boost revenues.3. Shifting Depreciation CostsGrizzly’s Accusations.Grizzly has accused NIO of indirectly shifting depreciation costs on the battery packs sold to Weineng, saving the EV maker north of RMB 336 million in depreciation expense on an annual basis.Specifically, Grizzly has assumed a 20% profit margin on NIO’s battery sales totalling RMB 2,796 million generated from Weineng in the nine months ending September 30, 2021. This represents battery assets valued at a cost basis of RMB 2.25 billion (i.e. 80% cost x RMB 2,796 in battery sales to Weineng, adjusted for minor rounding differences) removed from the EV maker’s balance sheet over the same period.Based on the five to eight years useful life attributable to equipment, including battery packs, used in NIO’s Power Swap business as disclosed in its 2021 20F, Grizzly has assumed an annual depreciation rate of about 15% on the battery packs sold to Weineng and removed from NIO’s balance sheet in the nine months ending September 30, 2021. This is consistent with the assumed BaaS revenue recognition timeline of about seven years as discussed in earlier sections. As such, Grizzly has accused NIO of avoiding depreciation costs of RMB 336 million (i.e. 15% battery depreciation rate x RMB 2,796 million in battery pack sales to Weineng) in the nine months ending September 30, 2021. The short-seller has also alluded to the RMB 336 million as a proxy for annual depreciation costs that NIO has avoided via its arrangement with Weineng.Issue with Grizzly’s claim.There are two folds to this situation:1. BaaS Business Model:Under the BaaS business model, the battery packs are considered equipment used in facilitating a service business. As such, the related battery packs would be subjected to depreciation over its useful life. In NIO’s case, if Weineng never existed and the EV maker consolidates its BaaS business, NIO would have had to recognized BaaS revenues pertaining to the 19,000 battery packs that Grizzly has attributed to the BaaS business over seven years, and accordingly record depreciation costs on these battery packs as well over their useful lives of about seven years. As mentioned in earlier sections, the related journal entries under the BaaS business model is as follows:Journal Entries for BaaS Business Model (Author)2. Battery Sales Business Model:in the current situation where NIO has sold the battery packs to Weineng, the battery packs are considered inventory to NIO. There is no depreciation costs related to inventory under GAAP-based accounting. Instead, NIO needs to record the costs of this inventory when they are removed from its balance sheet once the sale is recognized. As mentioned in earlier sections, the related journal entries under the battery sale business model is as follows:Journal Entries for Battery Sales Business Model (Author)Now, in NIO’s current actual situation, it is engaged in a battery sales business model under its performance obligation to Weineng, while Weineng is engaged in a BaaS business model under its performance obligation to BaaS subscribers.As discussed in our first challenge to Grizzly’s calculations pertaining to pulled forward revenue on BaaS battery sales to Weineng, NIO would have recorded costs of sales pertaining to the sold battery inventory when it recognized the related revenues. And this cost of sales number, based on a 20% profit margin assumption consistent with that used by Grizzly, would have accounted for the costs of battery inventory removed from NIO’s balance sheet upon completion of the sale to Weineng. This is consistent with Grizzly’s own calculation pertaining to profit margins on the battery packs that it alleges NIO had oversupplied to Weineng, which is inclusive of cost of sales related to written off inventory incurred by NIO upon recognition of related revenues.If NIO was engaged in the BaaS business model itself, without the intervention of Weineng, it would have recognized depreciation at a rate of 15% per year on the battery packs. However, under the upfront sale of related battery packs to Weineng, NIO would have recorded related cost of sales at an upfront rate of 80% as well. So basically, instead of recording revenues and depreciation costs on battery packs over time, NIO essentially recorded revenues and battery inventory costs upfront under its current arrangement with Weineng.Grizzly’s calculation of quantified impacts.Grizzly’s accusation that NIO has overstated revenues and earnings by 10% and 95%, respectively, through its affiliation with Weineng is calculated as follows:Grizzly's Computation of Total Revenue and Income Inflation (Grizzly Research)As discussed in earlier sections, NIO’s pulled forward BaaS revenues and inflated battery sales revenues via its affiliation with Weineng represent 4% and 6% of its total revenues, respectively, recognized in the nine months ending September 30, 2021. This represents the 10% in inflated NIO revenues as Grizzly has outlined in the above calculation.Livy’s revised calculation of quantified impacts.While we have yet to reconcile the RMB 1,777 million in total inflated net income that Grizzly has accused NIO of recognizing (please let us know in comments if you know), we believe the 95% variance identified by Grizzly is not a fair presentation of the quantified impact of its core short thesis.Our calculation of the quantified impact pertaining to Grizzly’s accusations that NIO has inflated revenue and earnings through (1) pulling forward BaaS sales, and (2) oversupplying batteries to Weineng, is as follows:Livy's Computation of Alleged Overstatements Related to Alleged Frontloading of BaaS Revenue (Author)Livy's Computation of Alleged Overstatements Pertaining to Alleged Overselling of Battery Supplies (Author)Livy's Computation of Alleged Revenue Overstatement (Author)Livy's Computation of Alleged Overstatement in Net Income (Author)Under Grizzly’s accusations of inflated revenue and earnings by NIO through its affiliation with Weineng, if found valid (which we remain skeptical of), NIO would have overstated net losses in the nine months ending September 30, 2021 by 28% instead of the 95% that Grizzly alleges – a material difference that again misleads investors on the estimated quantified impact pertaining to the accusations claimed by the short-seller. The net income variance of RMB 523 million ($78 million) found in our calculation is also immaterial (< 1%) based on NIO’s market value of $58.38 billion as of September 30, 2021 and NIO’s market value of approximately $35 billion today.Final ThoughtsAs discussed in the introduction of this analysis, Grizzly had also touched on things like NIO CEO Li’s association with fraudulent personnel, the pledge of NIO User Trust to UBS AG, and conflict of interests to further support its argument that NIO is engaged in fraudulent financial reporting. However, these are groundless allegations that have yet to be substantiated to infer Li is committing fraud via NIO’s operations. While investors should always exercise professional skepticism on publicly disclosed information in regulatory filings when making investment decisions, the same skepticism should also be placed on external claims – such as those by the short-seller, commentary by external sources, and/or even commentary herein – especially if they argue that correlation = causation (e.g. Grizzly’s method in inferring that fraud at NIO is substantiated given “dirt” it has dug up on Li’s past).While we agree that there are some good takeaways from the short-seller report that may require further clarification from management, it is important to recognize and acknowledge that a lot of it might also be misleading – or in the words of Grizzly, “exaggerated”. This is also consistent with NIO’s stock performance during Tuesday and Wednesday’s session following release of the short-seller report. The stock has largely moved in consistency with the ongoing market rout, and broad-based selloff across the EV sector, with no extreme deviation due to the negative headline from Grizzly, which indicates that market participants, especially significant shareholders in NIO, are still digesting the latest external allegations.At the end of the day, NIO remains one of the most viable EV businesses in the emerging sector, with continued demand for its vehicles to support further growth over the long-run. Unlike some of the upstarts in the increasingly competitive EV landscape that have been accused of fraud, such as Nikola (NKLA), Lordstown Motors (RIDE), and Faraday Future (FFIE), NIO already operates a global business with a substantiated vehicle order book to support the bulk of its top- and bottom-line expansion, which continues to support its positive valuation prospects ahead.This article was written by Livy Investment Research","news_type":1},"isVote":1,"tweetType":1,"viewCount":310,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3585983433962847","authorId":"3585983433962847","name":"tanpp2307","avatar":"https://static.tigerbbs.com/b4cb1adebe779f631f65a6b4332f7bc5","crmLevel":5,"crmLevelSwitch":0,"idStr":"3585983433962847","authorIdStr":"3585983433962847"},"content":"Agree absolutely! If they are so noble in wanting to protect retail investors, they themselves should not short the stock prior to releasing the so call report!","text":"Agree absolutely! If they are so noble in wanting to protect retail investors, they themselves should not short the stock prior to releasing the so call report!","html":"Agree absolutely! If they are so noble in wanting to protect retail investors, they themselves should not short the stock prior to releasing the so call report!"}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9053763805,"gmtCreate":1654590660207,"gmtModify":1676535474707,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"Is It worth a shot to buy Didi now?","listText":"Is It worth a shot to buy Didi now?","text":"Is It worth a shot to buy Didi now?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9053763805","repostId":"1127692441","repostType":2,"isVote":1,"tweetType":1,"viewCount":482,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9080012225,"gmtCreate":1649817954084,"gmtModify":1676534583405,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"Nice write up!","listText":"Nice write up!","text":"Nice write up!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9080012225","repostId":"2227664437","repostType":2,"repost":{"id":"2227664437","kind":"news","pubTimestamp":1649817058,"share":"https://ttm.financial/m/news/2227664437?lang=&edition=fundamental","pubTime":"2022-04-13 10:30","market":"us","language":"en","title":"NIO: Don't Buy Into The Fear, NIO Is An EV Pioneer","url":"https://stock-news.laohu8.com/highlight/detail?id=2227664437","media":"seekingalpha","summary":"Thesis SummaryNIO Inc (NYSE:NIO) has seen its share price drop by near 15% in the last five days. Wh","content":"<html><head></head><body><h2>Thesis Summary</h2><p>NIO Inc (NYSE:NIO) has seen its share price drop by near 15% in the last five days. While general market weakness has certainly played a part in this, NIO has been facing challenges at home. Most notably, NIO has had to suspend production due to COVID induced lockdowns around China. This is cause for concern, but the current sell-off is overblown.</p><p>A lot has happened with NIO in the last couple of weeks, and if we look at these developments closely, we can see that the good outweighs the bad. NIO is transforming itself into much more than an EV maker.</p><h2>Supply Issues Are Overblown</h2><p>First off, let’s address the issue of supply. NIO has been forced to suspend production because many of its supply partners are in cities facing harsh lockdowns. These include Jilin, Shanghai and Jiangsu. Shanghai, where NIO is headquartered, has been in a phased lockdown since the end of March.</p><p>NIO is no stranger to production halts, as it also faced issues in October 2021, when production was stopped due to upgrades being carried out. These were necessary to begin production of the ET7.</p><p>Having to stop production is a problem for a car company, but investors should not be overly concerned.</p><p>For starters, NIO is not the only <a href=\"https://laohu8.com/S/AONE.U\">one</a> facing this problem. Other EV makers such as Tesla Inc (TSLA) and XPeng (XPEV) have also halted production. This is a sector-wide problem that doesn’t only affect NIO.</p><p>Secondly, investors should understand that, where possible, work is being carried out. Halting production doesn’t mean that the factory is closed down. In fact, NIO could use this as a chance to carry out further upgrades to its supply lines, since I believe there is still work to be done in that area.</p><p>Lastly, it is worth mentioning that NIO, which has often been criticized for not having its production facilities, is addressing this issue head-on. In my last article, I mentioned that NIO has almost completed the building of its F2 manufacturing facility in the NeoPark. With both factories fully operational, NIO will be able to produce close to 240,000 units per year</p><p>More importantly though, last week NIO increased its stake in its joint venture with JAC Motors to 50%. JAC is NIO’s main production partner, and the two established a JV on March 31st of 2021 called Jianglai. Rumor is that Jianglai will be responsible for producing NIO’s sub-brand, which targets the mass market.</p><h2>NIO: More than a car company</h2><p>While investors are panicking over the supply issues, NIO is delivering encouraging news and catalysts for future growth.</p><p>First off, NIO reported very strong monthly deliveries, with a 37.6% YoY increase. NIO deployed 884 Power Swap stations and 727 Power Charger stations, as well as 3,832 destination chargers in China. And this is where it gets interesting.</p><p>NIO has recently begun building out its power stations in Europe, and the company is in talks with other car companies to begin leasing out its infrastructure. This would be a huge move for NIO and could change the way the company is perceived by the market.</p><p>What separates NIO from other EV companies are two things. One is that it primarily promotes the utilization of Battery-as-a-Service. And two, that it has built out an immense infrastructure of battery swap stations in China, and is now doing this to Europe.</p><p>Building swap stations are big investments, with estimated costs of $772,00, in China, and charging other companies to use its battery swap stations would be a win-win. It would help NIO monetize its infrastructure, and save other EV manufacturers millions in investments.</p><p>In order for other EVs to use these stations, though, there would have to be some degree of standardization in the batteries, but this doesn&#39;t have to be an obstacle. NIO could also lend other companies a hand in designing their batteries, an area in which NIO has extensive expertise. NIO has a total of 2,768 patents in China, 204 in Europe and 193 more in the United States.</p><p>NIO is not only an EV manufacturer, it is a company with a very large infrastructure and extensive intellectual capital. This is perhaps the most significant reason I own NIO.</p><p>For now, it seems like Lotus Technology could be one of NIO’s first customers. It is worth mentioning though, that Lotus is partially owned by NIO</p><h2>Risks</h2><p>What I like about NIO is that it is laying the foundations for long-term success. However, the question remains whether BaaS will become standard practice amongst EV manufacturers. NIO certainly believes so and has placed its battery swap stations next to Tesla’s superchargers, to showcase the improved user experience.</p><p>NIO’s battery swap stations can change a battery in a matter of minutes. This also entails that you can always have a fully serviced battery, and the initial cost for the car is cheaper, with the battery cost being spread out month-to-month.</p><p>However, while the service is superior, in the long run, this is a more expensive endeavor. It involves changing the battery every time and building out a much more expensive network of stations.</p><p>Tesla’s superchargers are much cheaper to install, and they can charge 200 miles in 15 minutes. Is NIO’s battery swap worth it? The consumer will decide that. However, what is most concerning to me is that battery technology is still in its early stages. A lot may change in the next few years, including sizes, materials needed and charging times. Improvements in battery technology could render the advantages of BaaS over regular charging obsolete.</p><h2>Takeaway</h2><p>NIO’s shares have slid significantly in the last week, and this doesn&#39;t reflect the reality of what is happening. While supply issues are a challenge, NIO’s expansion in Europe and its growth prospects beyond the sale of EVs should be more than enough to keep investors interested. NIO is a leader in battery technology and is building out an incredibly valuable infrastructure. It’s just a matter of time before the market realizes this.</p></body></html>","source":"seekingalpha","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>NIO: Don't Buy Into The Fear, NIO Is An EV Pioneer</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\">\nNIO: Don't Buy Into The Fear, NIO Is An EV Pioneer\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-04-13 10:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4501051-nio-dont-buy-into-the-fear-nio-is-an-ev-pioneer><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Thesis SummaryNIO Inc (NYSE:NIO) has seen its share price drop by near 15% in the last five days. While general market weakness has certainly played a part in this, NIO has been facing challenges at ...</p>\n\n<a href=\"https://seekingalpha.com/article/4501051-nio-dont-buy-into-the-fear-nio-is-an-ev-pioneer\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4531":"中概回港概念","EVS.SI":"MSCI China Electric Vehicles and Future Mobility ETF-NikkoAM","NIO":"蔚来","BK4099":"汽车制造商","BK4534":"瑞士信贷持仓","BK4509":"腾讯概念","BK4504":"桥水持仓","BK4505":"高瓴资本持仓","BK4555":"新能源车","BK4581":"高盛持仓","BK4548":"巴美列捷福持仓","BK4526":"热门中概股","BK4532":"文艺复兴科技持仓","BK4574":"无人驾驶"},"source_url":"https://seekingalpha.com/article/4501051-nio-dont-buy-into-the-fear-nio-is-an-ev-pioneer","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2227664437","content_text":"Thesis SummaryNIO Inc (NYSE:NIO) has seen its share price drop by near 15% in the last five days. While general market weakness has certainly played a part in this, NIO has been facing challenges at home. Most notably, NIO has had to suspend production due to COVID induced lockdowns around China. This is cause for concern, but the current sell-off is overblown.A lot has happened with NIO in the last couple of weeks, and if we look at these developments closely, we can see that the good outweighs the bad. NIO is transforming itself into much more than an EV maker.Supply Issues Are OverblownFirst off, let’s address the issue of supply. NIO has been forced to suspend production because many of its supply partners are in cities facing harsh lockdowns. These include Jilin, Shanghai and Jiangsu. Shanghai, where NIO is headquartered, has been in a phased lockdown since the end of March.NIO is no stranger to production halts, as it also faced issues in October 2021, when production was stopped due to upgrades being carried out. These were necessary to begin production of the ET7.Having to stop production is a problem for a car company, but investors should not be overly concerned.For starters, NIO is not the only one facing this problem. Other EV makers such as Tesla Inc (TSLA) and XPeng (XPEV) have also halted production. This is a sector-wide problem that doesn’t only affect NIO.Secondly, investors should understand that, where possible, work is being carried out. Halting production doesn’t mean that the factory is closed down. In fact, NIO could use this as a chance to carry out further upgrades to its supply lines, since I believe there is still work to be done in that area.Lastly, it is worth mentioning that NIO, which has often been criticized for not having its production facilities, is addressing this issue head-on. In my last article, I mentioned that NIO has almost completed the building of its F2 manufacturing facility in the NeoPark. With both factories fully operational, NIO will be able to produce close to 240,000 units per yearMore importantly though, last week NIO increased its stake in its joint venture with JAC Motors to 50%. JAC is NIO’s main production partner, and the two established a JV on March 31st of 2021 called Jianglai. Rumor is that Jianglai will be responsible for producing NIO’s sub-brand, which targets the mass market.NIO: More than a car companyWhile investors are panicking over the supply issues, NIO is delivering encouraging news and catalysts for future growth.First off, NIO reported very strong monthly deliveries, with a 37.6% YoY increase. NIO deployed 884 Power Swap stations and 727 Power Charger stations, as well as 3,832 destination chargers in China. And this is where it gets interesting.NIO has recently begun building out its power stations in Europe, and the company is in talks with other car companies to begin leasing out its infrastructure. This would be a huge move for NIO and could change the way the company is perceived by the market.What separates NIO from other EV companies are two things. One is that it primarily promotes the utilization of Battery-as-a-Service. And two, that it has built out an immense infrastructure of battery swap stations in China, and is now doing this to Europe.Building swap stations are big investments, with estimated costs of $772,00, in China, and charging other companies to use its battery swap stations would be a win-win. It would help NIO monetize its infrastructure, and save other EV manufacturers millions in investments.In order for other EVs to use these stations, though, there would have to be some degree of standardization in the batteries, but this doesn't have to be an obstacle. NIO could also lend other companies a hand in designing their batteries, an area in which NIO has extensive expertise. NIO has a total of 2,768 patents in China, 204 in Europe and 193 more in the United States.NIO is not only an EV manufacturer, it is a company with a very large infrastructure and extensive intellectual capital. This is perhaps the most significant reason I own NIO.For now, it seems like Lotus Technology could be one of NIO’s first customers. It is worth mentioning though, that Lotus is partially owned by NIORisksWhat I like about NIO is that it is laying the foundations for long-term success. However, the question remains whether BaaS will become standard practice amongst EV manufacturers. NIO certainly believes so and has placed its battery swap stations next to Tesla’s superchargers, to showcase the improved user experience.NIO’s battery swap stations can change a battery in a matter of minutes. This also entails that you can always have a fully serviced battery, and the initial cost for the car is cheaper, with the battery cost being spread out month-to-month.However, while the service is superior, in the long run, this is a more expensive endeavor. It involves changing the battery every time and building out a much more expensive network of stations.Tesla’s superchargers are much cheaper to install, and they can charge 200 miles in 15 minutes. Is NIO’s battery swap worth it? The consumer will decide that. However, what is most concerning to me is that battery technology is still in its early stages. A lot may change in the next few years, including sizes, materials needed and charging times. Improvements in battery technology could render the advantages of BaaS over regular charging obsolete.TakeawayNIO’s shares have slid significantly in the last week, and this doesn't reflect the reality of what is happening. While supply issues are a challenge, NIO’s expansion in Europe and its growth prospects beyond the sale of EVs should be more than enough to keep investors interested. NIO is a leader in battery technology and is building out an incredibly valuable infrastructure. It’s just a matter of time before the market realizes this.","news_type":1},"isVote":1,"tweetType":1,"viewCount":268,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9065977891,"gmtCreate":1652141858913,"gmtModify":1676535037993,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/SOFI\">$SoFi Technologies Inc.(SOFI)$</a>anyone still holding on to this stock, or doing dca on this? Thoughts?","listText":"<a href=\"https://ttm.financial/S/SOFI\">$SoFi Technologies Inc.(SOFI)$</a>anyone still holding on to this stock, or doing dca on this? Thoughts?","text":"$SoFi Technologies Inc.(SOFI)$anyone still holding on to this stock, or doing dca on this? Thoughts?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9065977891","isVote":1,"tweetType":1,"viewCount":327,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9018530885,"gmtCreate":1649057181083,"gmtModify":1676534442954,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/RIVN\">$Rivian Automotive, Inc.(RIVN)$</a>Will it swing back above $50 this week?","listText":"<a href=\"https://ttm.financial/S/RIVN\">$Rivian Automotive, Inc.(RIVN)$</a>Will it swing back above $50 this week?","text":"$Rivian Automotive, Inc.(RIVN)$Will it swing back above $50 this week?","images":[{"img":"https://community-static.tradeup.com/news/85c48f0a586255b273671e4a9d10a669","width":"1125","height":"3063"}],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9018530885","isVote":1,"tweetType":1,"viewCount":261,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":1,"langContent":"EN","totalScore":0},{"id":9995599525,"gmtCreate":1661478224469,"gmtModify":1676536527198,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/BN4.SI\">$KEPPEL CORPORATION LIMITED(BN4.SI)$</a>Bought this awhile ago ard $5...now it's back topre pandemic high. Do you guys think there are still a lot more upsides towards TP $9 or should I sell and re-invest elsewhere?","listText":"<a href=\"https://ttm.financial/S/BN4.SI\">$KEPPEL CORPORATION LIMITED(BN4.SI)$</a>Bought this awhile ago ard $5...now it's back topre pandemic high. Do you guys think there are still a lot more upsides towards TP $9 or should I sell and re-invest elsewhere?","text":"$KEPPEL CORPORATION LIMITED(BN4.SI)$Bought this awhile ago ard $5...now it's back topre pandemic high. Do you guys think there are still a lot more upsides towards TP $9 or should I sell and re-invest elsewhere?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9995599525","isVote":1,"tweetType":1,"viewCount":597,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3583895447755437","authorId":"3583895447755437","name":"gingy","avatar":"https://static.tigerbbs.com/29f400e3962b56b8602b0cd0dedf74e5","crmLevel":3,"crmLevelSwitch":0,"idStr":"3583895447755437","authorIdStr":"3583895447755437"},"content":"target price 6.90 to 10.10 some people sell some to get their profit and leave the capital there. some leave it there for dividend depends on why u bought it for growth or dividend","text":"target price 6.90 to 10.10 some people sell some to get their profit and leave the capital there. some leave it there for dividend depends on why u bought it for growth or dividend","html":"target price 6.90 to 10.10 some people sell some to get their profit and leave the capital there. some leave it there for dividend depends on why u bought it for growth or dividend"}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9016368538,"gmtCreate":1649129179853,"gmtModify":1676534456875,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/MULN\">$Mullen Automotive(MULN)$</a>Keeping this in the sideline for now","listText":"<a href=\"https://ttm.financial/S/MULN\">$Mullen Automotive(MULN)$</a>Keeping this in the sideline for now","text":"$Mullen Automotive(MULN)$Keeping this in the sideline for now","images":[{"img":"https://community-static.tradeup.com/news/ca572058ca6a9a2945715e71bae42b63","width":"1170","height":"2292"}],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9016368538","isVote":1,"tweetType":1,"viewCount":373,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":1,"langContent":"EN","totalScore":0},{"id":337981391192144,"gmtCreate":1723515517681,"gmtModify":1723515521463,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/Z74.SI\">$Singtel(Z74.SI)$&nbsp;</a> High short selling activity, number 1 net institutional buying last week With highest net retail investor selling last week..incoming squeeze and rally up?","listText":"<a href=\"https://ttm.financial/S/Z74.SI\">$Singtel(Z74.SI)$&nbsp;</a> High short selling activity, number 1 net institutional buying last week With highest net retail investor selling last week..incoming squeeze and rally up?","text":"$Singtel(Z74.SI)$ High short selling activity, number 1 net institutional buying last week With highest net retail investor selling last week..incoming squeeze and rally up?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/337981391192144","isVote":1,"tweetType":1,"viewCount":158,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9902413298,"gmtCreate":1659745923116,"gmtModify":1703741023955,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/AMC\">$AMC Entertainment(AMC)$</a>Started small position awhile ago, time to rinse and repeat?","listText":"<a href=\"https://ttm.financial/S/AMC\">$AMC Entertainment(AMC)$</a>Started small position awhile ago, time to rinse and repeat?","text":"$AMC Entertainment(AMC)$Started small position awhile ago, time to rinse and repeat?","images":[{"img":"https://community-static.tradeup.com/news/a7bc6406064981ddcfc8c74040680dd5","width":"1170","height":"2292"}],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9902413298","isVote":1,"tweetType":1,"viewCount":588,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":1,"langContent":"EN","totalScore":0},{"id":9052926557,"gmtCreate":1655112415479,"gmtModify":1676535563851,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/SOFI\">$SoFi Technologies Inc.(SOFI)$</a>Keeps dropping..looking to DCA when it&nbsp;dips&nbsp;below $5 this week","listText":"<a href=\"https://ttm.financial/S/SOFI\">$SoFi Technologies Inc.(SOFI)$</a>Keeps dropping..looking to DCA when it&nbsp;dips&nbsp;below $5 this week","text":"$SoFi Technologies Inc.(SOFI)$Keeps dropping..looking to DCA when it dips below $5 this week","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9052926557","isVote":1,"tweetType":1,"viewCount":158,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9059006642,"gmtCreate":1654257173786,"gmtModify":1676535420886,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/MU\">$Micron Technology(MU)$</a>Just when it starts to go on the upside, comes a downgrade that wiped out all the gains....","listText":"<a href=\"https://ttm.financial/S/MU\">$Micron Technology(MU)$</a>Just when it starts to go on the upside, comes a downgrade that wiped out all the gains....","text":"$Micron Technology(MU)$Just when it starts to go on the upside, comes a downgrade that wiped out all the gains....","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059006642","isVote":1,"tweetType":1,"viewCount":699,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9065636110,"gmtCreate":1652184980130,"gmtModify":1676535047343,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/SOFI\">$SoFi Technologies Inc.(SOFI)$</a>Why is Sofi dropping so much in PM?","listText":"<a href=\"https://ttm.financial/S/SOFI\">$SoFi Technologies Inc.(SOFI)$</a>Why is Sofi dropping so much in PM?","text":"$SoFi Technologies Inc.(SOFI)$Why is Sofi dropping so much in PM?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9065636110","isVote":1,"tweetType":1,"viewCount":1060,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"4093776090978210","authorId":"4093776090978210","name":"ZhengWen","avatar":"https://static.tigerbbs.com/54ee488862e06f4f5071fbea220cc291","crmLevel":1,"crmLevelSwitch":0,"idStr":"4093776090978210","authorIdStr":"4093776090978210"},"content":"Pull back by other fintech earning reports…. 2day will be SOFI’s turn","text":"Pull back by other fintech earning reports…. 2day will be SOFI’s turn","html":"Pull back by other fintech earning reports…. 2day will be SOFI’s turn"}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9084615421,"gmtCreate":1650855100254,"gmtModify":1676534804265,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"Great write up!","listText":"Great write up!","text":"Great write up!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9084615421","repostId":"2229419405","repostType":2,"repost":{"id":"2229419405","kind":"news","pubTimestamp":1650853161,"share":"https://ttm.financial/m/news/2229419405?lang=&edition=fundamental","pubTime":"2022-04-25 10:19","market":"us","language":"en","title":"Palantir: The Recovery Will Be Swift","url":"https://stock-news.laohu8.com/highlight/detail?id=2229419405","media":"seekingalpha","summary":"Michael Vi/iStock Editorial via Getty ImagesAt one point directly after its IPO, Palantir (NYSE:PLTR","content":"<html><head></head><body><p></p><p><img src=\"https://static.tigerbbs.com/6e55afba46da91024e894cba7d803410\" tg-width=\"750\" tg-height=\"500\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Michael Vi/iStock Editorial via Getty Images</p><p></p><p>At <a href=\"https://laohu8.com/S/AONE.U\">one</a> point directly after its IPO, Palantir (NYSE:PLTR) was one of the hottest trades on Wall Street. This secretive machine learning and big data stock had become a household name and saw its shares triple from its initial debut - but unsurprisingly, Palantir has also become one of the biggest victims of the recent tech crash.</p><p>Relative to highs above $35, Palantir has now given up two-thirds of its value, the equivalent of about $50 billion in market cap. Year to date alone, Palantir stock has shed 35%. While even I can&#39;t argue that Palantir had run a little hot last year and was in need of a slight correction, as usual poor sentiment has taken the crash too far - leaving Palantir in very buyable territory.</p><p></p><p><img src=\"https://static.tigerbbs.com/6eda4c8def524442f50bfb3d898f777d\" tg-width=\"635\" tg-height=\"417\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/>Data by YCharts</p><p></p><p>While Palantir has been one of the biggest holes in my portfolio this year, I remain <b>strongly bullish</b> on this stock and am invested for the long term. It&#39;s difficult to regard Palantir&#39;s venerable customer base, its best-of-breed series of both commercial and government products, and its visionary leadership and not conclude that Palantir will continue to dominate enterprise software over the next few decades.</p><p>There has been a lot of negativity around Palantir recently, but almost none of it is company-specific. It&#39;s all about de-risking portfolios and expensive valuations in the face of rising interest rates - which I view to be shorter-term arguments that don&#39;t in any way diminish the attractiveness of Palantir in the long run. This is a company that has claimed a $100+ billion TAM, with its main products each adding market opportunity and becoming behemoths in their own rights over time:</p><p></p><p><img src=\"https://static.tigerbbs.com/141948bb2e1e997bb4c74ba8f9b93eeb\" tg-width=\"640\" tg-height=\"350\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Palantir TAM (Palantir Q4 investor deck)</p><p></p><p>Here&#39;s a rundown of the key pieces of the bullish thesis for Palantir:</p><ul><li><b>Big data is a massive discipline that can be applied in nearly limitless ways.</b> Palantir isn&#39;t a software company that serves only one or a limited set of use cases. Data and inferences that can be made from data are prevalent in just about everything: which explains why Palantir is such a powerful tool for both public and private sector clients.</li><li><b>Growth at scale.</b> Despite being at a ~$2 billion annual revenue scale, Palantir continues to deliver 30-40% y/y revenue growth, and its long-term outlook calls for the company to be able to sustain growth rates in excess of 30% y/y through at least 2025. Few companies are able to achieve this kind of growth at scale, and it&#39;s a testament to the wide applicability of Palantir&#39;s products and the humongous clientele it has drawn (in particular, the U.S. Army).</li><li><b>Stepping up go-to-market momentum.</b> Palantir is chasing growth across a wide variety of channels. The company has stepped up its sales hiring this year, a nod at the broad market opportunity it has and the need for more territory coverage. Palantir also has deepened relationships with ISVs (integrated service vendors) that can resell Palantir&#39;s products without its involvement and offer additional coverage that Palantir&#39;s direct sales force can&#39;t handle.</li><li><b>One foot in the public sector, one foot in private</b>. Palantir made its name on being a large federal government contractor, but its products are just as compelling to an enterprise segment that is growing ever more obsessed with the value of big data. Most software companies start off as primarily dealing with enterprise buyers, and then hopefully getting FedRAMP certification to sell into public sector clients later. Palantir did the reverse: but now, its momentum with Fortune 100 companies is continuing to grow, and customer adds are continuing to trend at an impressive pace.</li><li><b>Free cash flow. </b>Though not yet profitable from a GAAP standpoint, Palantir continues to exceed internal expectations for free cash flow, which means the business is self-financing (a departure from. many other rapid-growth software companies that continue to need to raise capital to finance their losses).</li></ul><p>Stay long here: Palantir is still a growth stock in the early days of becoming a tech mega-cap.</p><h2>Growth has sustained, thanks to commercial progress</h2><p>Palantir&#39;s original claim to fame, and the reason it attained its &#34;hush hush&#34; reputation in Silicon Valley, is that it was the software that helped the U.S. government track down Osama bin Laden. While Palantir made its reputation as a government contractor, and while government revenue and massive federal deals continue to forge the lion&#39;s share of Palantir&#39;s business, the company has been able to sustain its rapid growth rates primarily by boosting its commercial presence.</p><p>First, on overall growth: in Q4, Palantir&#39;s most recent quarter, the company grew revenue at a 34% y/y pace to $432.8 million, beating Wall Street&#39;s expectations of $418.1 million (+30% y/y) by a four-point margin. The Q4 earnings summary is shown below:</p><p></p><p><img src=\"https://static.tigerbbs.com/e512ff66f56152913be908f4d06cd3d2\" tg-width=\"640\" tg-height=\"394\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Palantir Q4 results (Palantir Q4 earnings release)</p><p></p><p>Helping to index the company&#39;s growth rate upward has been its progress on the enterprise side. Palantir describes its enterprise software product, Palantir Foundry, as a product that is now as essential to modern enterprises as Amazon AWS was to building cloud applications. Foundry is an OS (operating system) product that helps integrate data to power applications and has thousands of use cases across all industries.</p><p>In Q4, US commercial revenue growth <b>accelerated for the third straight quarter to 132% y/y growth</b>. And at the end of 2021, Palantir counted 80 enterprise customers. Now, you can read that number two ways: you can be impressed that it represents 371% y/y growth, but you can also imagine there is still ample room for expansion into the rest of the Fortune 500.</p><p>U.S. enterprise revenue now also comprises 13% of total revenue:</p><p></p><p><img src=\"https://static.tigerbbs.com/abedba5c2813c73ae0c0d3644ca4cd7f\" tg-width=\"640\" tg-height=\"352\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Palantir US commercial revenue progression (Palantir Q4 investor presentation)</p><p></p><p>Yet the company is preparing for even more growth on the enterprise side. It entered into 2021 with a <b>very lean sales headcount, </b>having only 12 total salespeople focused on U.S. enterprises. In 2021 the company made deep strides on sales hiring, which is now up to 80 strong. More importantly, however, the company enters into 2022 with 25 tenured salespeople, more than quadruple the year-ago quarter: allowing Palantir to cover far more breadth this year than last.</p><p></p><p><img src=\"https://static.tigerbbs.com/78ba646d08cb95ab32745b0088aa1b4c\" tg-width=\"640\" tg-height=\"316\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Palantir sales headcount expansion (Palantir Q4 investor presentation)</p><p></p><p>Hiring, and growth overall, remain top of mind for Palantir execs. Per CEO Alex Karp&#39;s remarks on the most recent earnings call:</p><blockquote>We&#39;re in the market to hire aggressively across Palantir, honestly, mostly not salespeople because we believe we live and die based on our ability to build products of tomorrow delivered today.</blockquote><blockquote>But we&#39;re hiring -- going to hire in the range of 200 people. Hiring and getting value out of them are two different things. And so I think one of the things that we will see going forward is how do we play these salespeople, so that we can get as much lift from them as we&#39;re getting from the product itself. And we&#39;re at the beginning of that. And so it is the part to people we&#39;ve fully indoctrinated or as normal people might say, trained, are effective, but we&#39;ve never done this before. There will be -- that&#39;s a process, we&#39;re also looking at ways to learn from other companies, but that&#39;s going to happen over the next couple of years.&#34;</blockquote><h2>Profitability has made huge leaps</h2><p>In spite of Palantir&#39;s clear focus on growth, though, we can look across the entire spate of Palantir&#39;s profitability metrics and see marked improvement. Earlier on in the company&#39;s public debut, investors questioned Palantir&#39;s large GAAP losses and concluded that this was, like any other tech company, one that focused on growth at all costs. Now, we&#39;re not so sure that argument is valid.</p><p>First, a look at GAAP margins. GAAP operating margin in Q4 hit a record-high -14%, up <b>thirty-five points </b>from -49% in the year-ago quarter:</p><p></p><p><img src=\"https://static.tigerbbs.com/0bd4d857bb5a7558834c288c2f12e8fc\" tg-width=\"640\" tg-height=\"306\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Palantir margin trends (Palantir Q4 investor presentation)</p><p></p><p>Similarly, adjusted EBITDA grew 13 points for the year FY21 to 32%, thirteen points better than in FY20:</p><p></p><p><img src=\"https://static.tigerbbs.com/58292146895f5be6ca2692c1d3d3c230\" tg-width=\"640\" tg-height=\"217\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Palantir adjusted EBITDA (Palantir Q4 earnings release)</p><p></p><p>And lastly, Palantir generated $424.1 million in free cash flow in FY21, representing a rich 28% free cash flow margin - more than fifty points better than -25% in FY20.</p><p></p><p><img src=\"https://static.tigerbbs.com/acb7db7408229ac728bf88693bdf5b41\" tg-width=\"640\" tg-height=\"144\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Palantir FCF (Palantir Q4 earnings release)</p><p></p><p>The chart below also showcases that, relative to many SaaS peers, Palantir&#39;s balance of growth plus FCF margin outranks most competitors:</p><p></p><p><img src=\"https://static.tigerbbs.com/432fed690595b676258a807bc0427934\" tg-width=\"640\" tg-height=\"351\" referrerpolicy=\"no-referrer\" width=\"100%\" height=\"auto\"/></p><p>Palantir growth + FCF (Palantir Q4 investor presentation)</p><p></p><p>With this year&#39;s market landscape so focused on safety and profitability, Palantir&#39;s huge improvements on profitability have given investors <b>exactly </b>the remedy to one of their biggest concerns - and yet, the stock has still slid.</p><h2>Valuation and key takeaways</h2><p>At current share prices near $12, Palantir trades at a $25.17 billion market cap. After netting off the $2.52 billion of cash on the company&#39;s most recent balance sheet, its <b>enterprise value goes to $22.64 billion</b>.</p><p>Meanwhile, Wall Street analysts are calling for $2.01 billion in consensus revenue for the year FY22, representing 30% y/y growth (considering Karp has committed to &#34;at least&#34; 30% growth through FY25, it&#39;s highly likely that Palantir&#39;s actual growth for the year will land several points higher). Still, if we take that consensus at face value, Palantir trades at <b>11.3x EV/FY22 revenue </b>- still not cheap by any measure, but less than half of Palantir&#39;s peak multiples in the mid-20s.</p><p>I continue to view the current slide as a once-in-a-lifetime opportunity to buy a transformational tech company that is still early on in its path to becoming a tech mega-cap. Stay long here, be patient, and wait for a rebound that I expect will be a swift upward shot.</p></body></html>","source":"seekingalpha","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>Palantir: The Recovery Will Be Swift</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\">\nPalantir: The Recovery Will Be Swift\n</h2>\n\n<h4 class=\"meta\">\n\n\n2022-04-25 10:19 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4503192-palantir-recovery-swift><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Michael Vi/iStock Editorial via Getty ImagesAt one point directly after its IPO, Palantir (NYSE:PLTR) was one of the hottest trades on Wall Street. This secretive machine learning and big data stock ...</p>\n\n<a href=\"https://seekingalpha.com/article/4503192-palantir-recovery-swift\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4023":"应用软件","BK4547":"WSB热门概念","BK4543":"AI","PLTR":"Palantir Technologies Inc."},"source_url":"https://seekingalpha.com/article/4503192-palantir-recovery-swift","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2229419405","content_text":"Michael Vi/iStock Editorial via Getty ImagesAt one point directly after its IPO, Palantir (NYSE:PLTR) was one of the hottest trades on Wall Street. This secretive machine learning and big data stock had become a household name and saw its shares triple from its initial debut - but unsurprisingly, Palantir has also become one of the biggest victims of the recent tech crash.Relative to highs above $35, Palantir has now given up two-thirds of its value, the equivalent of about $50 billion in market cap. Year to date alone, Palantir stock has shed 35%. While even I can't argue that Palantir had run a little hot last year and was in need of a slight correction, as usual poor sentiment has taken the crash too far - leaving Palantir in very buyable territory.Data by YChartsWhile Palantir has been one of the biggest holes in my portfolio this year, I remain strongly bullish on this stock and am invested for the long term. It's difficult to regard Palantir's venerable customer base, its best-of-breed series of both commercial and government products, and its visionary leadership and not conclude that Palantir will continue to dominate enterprise software over the next few decades.There has been a lot of negativity around Palantir recently, but almost none of it is company-specific. It's all about de-risking portfolios and expensive valuations in the face of rising interest rates - which I view to be shorter-term arguments that don't in any way diminish the attractiveness of Palantir in the long run. This is a company that has claimed a $100+ billion TAM, with its main products each adding market opportunity and becoming behemoths in their own rights over time:Palantir TAM (Palantir Q4 investor deck)Here's a rundown of the key pieces of the bullish thesis for Palantir:Big data is a massive discipline that can be applied in nearly limitless ways. Palantir isn't a software company that serves only one or a limited set of use cases. Data and inferences that can be made from data are prevalent in just about everything: which explains why Palantir is such a powerful tool for both public and private sector clients.Growth at scale. Despite being at a ~$2 billion annual revenue scale, Palantir continues to deliver 30-40% y/y revenue growth, and its long-term outlook calls for the company to be able to sustain growth rates in excess of 30% y/y through at least 2025. Few companies are able to achieve this kind of growth at scale, and it's a testament to the wide applicability of Palantir's products and the humongous clientele it has drawn (in particular, the U.S. Army).Stepping up go-to-market momentum. Palantir is chasing growth across a wide variety of channels. The company has stepped up its sales hiring this year, a nod at the broad market opportunity it has and the need for more territory coverage. Palantir also has deepened relationships with ISVs (integrated service vendors) that can resell Palantir's products without its involvement and offer additional coverage that Palantir's direct sales force can't handle.One foot in the public sector, one foot in private. Palantir made its name on being a large federal government contractor, but its products are just as compelling to an enterprise segment that is growing ever more obsessed with the value of big data. Most software companies start off as primarily dealing with enterprise buyers, and then hopefully getting FedRAMP certification to sell into public sector clients later. Palantir did the reverse: but now, its momentum with Fortune 100 companies is continuing to grow, and customer adds are continuing to trend at an impressive pace.Free cash flow. Though not yet profitable from a GAAP standpoint, Palantir continues to exceed internal expectations for free cash flow, which means the business is self-financing (a departure from. many other rapid-growth software companies that continue to need to raise capital to finance their losses).Stay long here: Palantir is still a growth stock in the early days of becoming a tech mega-cap.Growth has sustained, thanks to commercial progressPalantir's original claim to fame, and the reason it attained its \"hush hush\" reputation in Silicon Valley, is that it was the software that helped the U.S. government track down Osama bin Laden. While Palantir made its reputation as a government contractor, and while government revenue and massive federal deals continue to forge the lion's share of Palantir's business, the company has been able to sustain its rapid growth rates primarily by boosting its commercial presence.First, on overall growth: in Q4, Palantir's most recent quarter, the company grew revenue at a 34% y/y pace to $432.8 million, beating Wall Street's expectations of $418.1 million (+30% y/y) by a four-point margin. The Q4 earnings summary is shown below:Palantir Q4 results (Palantir Q4 earnings release)Helping to index the company's growth rate upward has been its progress on the enterprise side. Palantir describes its enterprise software product, Palantir Foundry, as a product that is now as essential to modern enterprises as Amazon AWS was to building cloud applications. Foundry is an OS (operating system) product that helps integrate data to power applications and has thousands of use cases across all industries.In Q4, US commercial revenue growth accelerated for the third straight quarter to 132% y/y growth. And at the end of 2021, Palantir counted 80 enterprise customers. Now, you can read that number two ways: you can be impressed that it represents 371% y/y growth, but you can also imagine there is still ample room for expansion into the rest of the Fortune 500.U.S. enterprise revenue now also comprises 13% of total revenue:Palantir US commercial revenue progression (Palantir Q4 investor presentation)Yet the company is preparing for even more growth on the enterprise side. It entered into 2021 with a very lean sales headcount, having only 12 total salespeople focused on U.S. enterprises. In 2021 the company made deep strides on sales hiring, which is now up to 80 strong. More importantly, however, the company enters into 2022 with 25 tenured salespeople, more than quadruple the year-ago quarter: allowing Palantir to cover far more breadth this year than last.Palantir sales headcount expansion (Palantir Q4 investor presentation)Hiring, and growth overall, remain top of mind for Palantir execs. Per CEO Alex Karp's remarks on the most recent earnings call:We're in the market to hire aggressively across Palantir, honestly, mostly not salespeople because we believe we live and die based on our ability to build products of tomorrow delivered today.But we're hiring -- going to hire in the range of 200 people. Hiring and getting value out of them are two different things. And so I think one of the things that we will see going forward is how do we play these salespeople, so that we can get as much lift from them as we're getting from the product itself. And we're at the beginning of that. And so it is the part to people we've fully indoctrinated or as normal people might say, trained, are effective, but we've never done this before. There will be -- that's a process, we're also looking at ways to learn from other companies, but that's going to happen over the next couple of years.\"Profitability has made huge leapsIn spite of Palantir's clear focus on growth, though, we can look across the entire spate of Palantir's profitability metrics and see marked improvement. Earlier on in the company's public debut, investors questioned Palantir's large GAAP losses and concluded that this was, like any other tech company, one that focused on growth at all costs. Now, we're not so sure that argument is valid.First, a look at GAAP margins. GAAP operating margin in Q4 hit a record-high -14%, up thirty-five points from -49% in the year-ago quarter:Palantir margin trends (Palantir Q4 investor presentation)Similarly, adjusted EBITDA grew 13 points for the year FY21 to 32%, thirteen points better than in FY20:Palantir adjusted EBITDA (Palantir Q4 earnings release)And lastly, Palantir generated $424.1 million in free cash flow in FY21, representing a rich 28% free cash flow margin - more than fifty points better than -25% in FY20.Palantir FCF (Palantir Q4 earnings release)The chart below also showcases that, relative to many SaaS peers, Palantir's balance of growth plus FCF margin outranks most competitors:Palantir growth + FCF (Palantir Q4 investor presentation)With this year's market landscape so focused on safety and profitability, Palantir's huge improvements on profitability have given investors exactly the remedy to one of their biggest concerns - and yet, the stock has still slid.Valuation and key takeawaysAt current share prices near $12, Palantir trades at a $25.17 billion market cap. After netting off the $2.52 billion of cash on the company's most recent balance sheet, its enterprise value goes to $22.64 billion.Meanwhile, Wall Street analysts are calling for $2.01 billion in consensus revenue for the year FY22, representing 30% y/y growth (considering Karp has committed to \"at least\" 30% growth through FY25, it's highly likely that Palantir's actual growth for the year will land several points higher). Still, if we take that consensus at face value, Palantir trades at 11.3x EV/FY22 revenue - still not cheap by any measure, but less than half of Palantir's peak multiples in the mid-20s.I continue to view the current slide as a once-in-a-lifetime opportunity to buy a transformational tech company that is still early on in its path to becoming a tech mega-cap. Stay long here, be patient, and wait for a rebound that I expect will be a swift upward shot.","news_type":1},"isVote":1,"tweetType":1,"viewCount":54,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9995156906,"gmtCreate":1661434368409,"gmtModify":1676536517605,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"‌<a href=\"https://laohu8.com/S/GRAB\">$Grab Holdings(GRAB)$</a>‌tank city at the open...","listText":"‌<a href=\"https://laohu8.com/S/GRAB\">$Grab Holdings(GRAB)$</a>‌tank city at the open...","text":"‌$Grab Holdings(GRAB)$‌tank city at the open...","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9995156906","isVote":1,"tweetType":1,"viewCount":356,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9045957470,"gmtCreate":1656553557490,"gmtModify":1676535852687,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/C6L.SI\">$SINGAPORE AIRLINES LTD(C6L.SI)$</a>Sidewaymovements since it broke below 5.20...despiteall talk about increasing traffic, headwind still inevitably strong for this stock","listText":"<a href=\"https://ttm.financial/S/C6L.SI\">$SINGAPORE AIRLINES LTD(C6L.SI)$</a>Sidewaymovements since it broke below 5.20...despiteall talk about increasing traffic, headwind still inevitably strong for this stock","text":"$SINGAPORE AIRLINES LTD(C6L.SI)$Sidewaymovements since it broke below 5.20...despiteall talk about increasing traffic, headwind still inevitably strong for this stock","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9045957470","isVote":1,"tweetType":1,"viewCount":297,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9059951529,"gmtCreate":1654297913961,"gmtModify":1676535425568,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"Good read","listText":"Good read","text":"Good read","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9059951529","repostId":"2240272383","repostType":2,"isVote":1,"tweetType":1,"viewCount":306,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9022539667,"gmtCreate":1653542165959,"gmtModify":1676535301801,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/UAA\">$Under Armour Class A(UAA)$</a>'The only way is through' UA's brand tagline previously..new CEO could pave the way for brand. Outgoing CEO too operational, not savvy enough to addvalue to shareholders","listText":"<a href=\"https://ttm.financial/S/UAA\">$Under Armour Class A(UAA)$</a>'The only way is through' UA's brand tagline previously..new CEO could pave the way for brand. Outgoing CEO too operational, not savvy enough to addvalue to shareholders","text":"$Under Armour Class A(UAA)$'The only way is through' UA's brand tagline previously..new CEO could pave the way for brand. Outgoing CEO too operational, not savvy enough to addvalue to shareholders","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9022539667","isVote":1,"tweetType":1,"viewCount":557,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9087547004,"gmtCreate":1651028531000,"gmtModify":1676534837451,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"Good positive news, but unfortunately maskedby&nbsp;broad market challenges..","listText":"Good positive news, but unfortunately maskedby&nbsp;broad market challenges..","text":"Good positive news, but unfortunately maskedby broad market challenges..","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9087547004","repostId":"2230348063","repostType":2,"repost":{"id":"2230348063","kind":"news","weMediaInfo":{"introduction":"Reuters.com brings you the latest news from around the world, covering breaking news in markets, business, politics, entertainment and technology","home_visible":1,"media_name":"Reuters","id":"1036604489","head_image":"https://static.tigerbbs.com/443ce19704621c837795676028cec868"},"pubTimestamp":1651025330,"share":"https://ttm.financial/m/news/2230348063?lang=&edition=fundamental","pubTime":"2022-04-27 10:08","market":"us","language":"en","title":"Lucid Says Saudi Arabia Will Purchase up to 100,000 Vehicles Over 10 Years","url":"https://stock-news.laohu8.com/highlight/detail?id=2230348063","media":"Reuters","summary":"(Reuters) - Electric carmaker Lucid Group Inc on Tuesday said it has signed an agreement with the go","content":"<html><head></head><body><p>(Reuters) - Electric carmaker <a href=\"https://laohu8.com/S/LCID\">Lucid Group Inc</a> on Tuesday said it has signed an agreement with the government of Saudi Arabia for the purchase of up to 100,000 of its vehicles over the next 10 years.</p><p>Saudi Arabia commits to purchase 50,000 vehicles under the agreement, with an option to buy an additional 50,000 vehicles during the ten-year time frame, Lucid said in a statement.</p><p>Lucid shares rose 5.95% in extended trading following the announcement.</p><p><img src=\"https://static.tigerbbs.com/c39f4c56c68ab9bfaa9ec05e6d8c0035\" tg-width=\"943\" tg-height=\"673\" referrerpolicy=\"no-referrer\"/>The deal marks the latest tie-up between the California-based EV company and Saudi Arabia, whose Public Investment Fund is Lucid&#39;s largest shareholder, with about a 61% stake in the company.</p><p>Lucid, which currently manufactures its vehicles at a plant in Arizona, also plans to build its first overseas production factory in Saudi Arabia later this year, where it expects to eventually manufacture up to 150,000 vehicles per year.</p><p>The vehicles bought by the Saudi government are expected to come from both factories, Lucid said.</p><p>Delivery of the vehicles is expected to start no later than 2023, with order numbers initially ranging from 1,000 to 2,000 annually, and increasing to between 4,000 and 7,000 starting in 2025.</p><p>A Lucid spokeswoman said the company has not offered discounts for any vehicles under the agreement.</p><p>Lucid in a regulatory filing said the Saudi government would pay either the U.S. or Saudi retail price, whichever is lower, in addition to import and other delivery costs.</p><p>The automaker, which looks to compete with Tesla Inc, in February cut its 2022 production forecast from 20,000 vehicles to 12,000 to 14,000 vehicles this year due to supply chain challenges.</p><p>It began deliveries of its $169,000 Lucid Air premium sedan in the United States in October, and said it expects to deliver to Canadian customers beginning this spring.</p></body></html>","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>Lucid Says Saudi Arabia Will Purchase up to 100,000 Vehicles Over 10 Years</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{ 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}\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\">\nLucid Says Saudi Arabia Will Purchase up to 100,000 Vehicles Over 10 Years\n</h2>\n\n<h4 class=\"meta\">\n\n\n<a class=\"head\" href=\"https://laohu8.com/wemedia/1036604489\">\n\n\n<div class=\"h-thumb\" style=\"background-image:url(https://static.tigerbbs.com/443ce19704621c837795676028cec868);background-size:cover;\"></div>\n\n<div class=\"h-content\">\n<p class=\"h-name\">Reuters </p>\n<p class=\"h-time\">2022-04-27 10:08</p>\n</div>\n\n</a>\n\n\n</h4>\n\n</header>\n<article>\n<html><head></head><body><p>(Reuters) - Electric carmaker <a href=\"https://laohu8.com/S/LCID\">Lucid Group Inc</a> on Tuesday said it has signed an agreement with the government of Saudi Arabia for the purchase of up to 100,000 of its vehicles over the next 10 years.</p><p>Saudi Arabia commits to purchase 50,000 vehicles under the agreement, with an option to buy an additional 50,000 vehicles during the ten-year time frame, Lucid said in a statement.</p><p>Lucid shares rose 5.95% in extended trading following the announcement.</p><p><img src=\"https://static.tigerbbs.com/c39f4c56c68ab9bfaa9ec05e6d8c0035\" tg-width=\"943\" tg-height=\"673\" referrerpolicy=\"no-referrer\"/>The deal marks the latest tie-up between the California-based EV company and Saudi Arabia, whose Public Investment Fund is Lucid&#39;s largest shareholder, with about a 61% stake in the company.</p><p>Lucid, which currently manufactures its vehicles at a plant in Arizona, also plans to build its first overseas production factory in Saudi Arabia later this year, where it expects to eventually manufacture up to 150,000 vehicles per year.</p><p>The vehicles bought by the Saudi government are expected to come from both factories, Lucid said.</p><p>Delivery of the vehicles is expected to start no later than 2023, with order numbers initially ranging from 1,000 to 2,000 annually, and increasing to between 4,000 and 7,000 starting in 2025.</p><p>A Lucid spokeswoman said the company has not offered discounts for any vehicles under the agreement.</p><p>Lucid in a regulatory filing said the Saudi government would pay either the U.S. or Saudi retail price, whichever is lower, in addition to import and other delivery costs.</p><p>The automaker, which looks to compete with Tesla Inc, in February cut its 2022 production forecast from 20,000 vehicles to 12,000 to 14,000 vehicles this year due to supply chain challenges.</p><p>It began deliveries of its $169,000 Lucid Air premium sedan in the United States in October, and said it expects to deliver to Canadian customers beginning this spring.</p></body></html>\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4555":"新能源车","BK4551":"寇图资本持仓","BK4099":"汽车制造商"},"source_url":"","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2230348063","content_text":"(Reuters) - Electric carmaker Lucid Group Inc on Tuesday said it has signed an agreement with the government of Saudi Arabia for the purchase of up to 100,000 of its vehicles over the next 10 years.Saudi Arabia commits to purchase 50,000 vehicles under the agreement, with an option to buy an additional 50,000 vehicles during the ten-year time frame, Lucid said in a statement.Lucid shares rose 5.95% in extended trading following the announcement.The deal marks the latest tie-up between the California-based EV company and Saudi Arabia, whose Public Investment Fund is Lucid's largest shareholder, with about a 61% stake in the company.Lucid, which currently manufactures its vehicles at a plant in Arizona, also plans to build its first overseas production factory in Saudi Arabia later this year, where it expects to eventually manufacture up to 150,000 vehicles per year.The vehicles bought by the Saudi government are expected to come from both factories, Lucid said.Delivery of the vehicles is expected to start no later than 2023, with order numbers initially ranging from 1,000 to 2,000 annually, and increasing to between 4,000 and 7,000 starting in 2025.A Lucid spokeswoman said the company has not offered discounts for any vehicles under the agreement.Lucid in a regulatory filing said the Saudi government would pay either the U.S. or Saudi retail price, whichever is lower, in addition to import and other delivery costs.The automaker, which looks to compete with Tesla Inc, in February cut its 2022 production forecast from 20,000 vehicles to 12,000 to 14,000 vehicles this year due to supply chain challenges.It began deliveries of its $169,000 Lucid Air premium sedan in the United States in October, and said it expects to deliver to Canadian customers beginning this spring.","news_type":1},"isVote":1,"tweetType":1,"viewCount":52,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":9087921106,"gmtCreate":1650942347555,"gmtModify":1676534820617,"author":{"id":"4101449357353590","authorId":"4101449357353590","name":"Nomo77","avatar":"https://static.laohu8.com/default-avatar.jpg","crmLevel":6,"crmLevelSwitch":1,"followedFlag":false,"idStr":"4101449357353590","authorIdStr":"4101449357353590"},"themes":[],"htmlText":"<a href=\"https://ttm.financial/S/S08.SI\">$SINGAPORE POST LIMITED(S08.SI)$</a>Finally this is moving up..anyone knows any specific catalyst driving this?","listText":"<a href=\"https://ttm.financial/S/S08.SI\">$SINGAPORE POST LIMITED(S08.SI)$</a>Finally this is moving up..anyone knows any specific catalyst driving this?","text":"$SINGAPORE POST LIMITED(S08.SI)$Finally this is moving up..anyone knows any specific catalyst driving this?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9087921106","isVote":1,"tweetType":1,"viewCount":185,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}