Nio Stock’s Grim Reality: 3 Brutal Truths Dooming the Once-Promising EV Upstart

InvestorPlace04-22

Meet Louis Navellier As the situation remains unchanged, Nio (NIO) has tumbled down to even lower lows. The EV maker faces slow sales growth, cash burn, and likely shareholder dilution. Expect ...

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GMT+8&nbsp;&nbsp;&nbsp;<a href=https://investorplace.com/market360/2024/04/nio-stocks-grim-reality-3-brutal-truths-dooming-the-once-promising-ev-upstart/><strong>InvestorPlace</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Meet Louis Navellier\t\t\n\n\n\n\n\nAs the situation remains unchanged, Nio (NIO) has tumbled down to even lower lows.\nThe EV maker faces slow sales growth, cash burn, and likely shareholder dilution.\nExpect ...</p>\n\n<a href=\"https://investorplace.com/market360/2024/04/nio-stocks-grim-reality-3-brutal-truths-dooming-the-once-promising-ev-upstart/\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0097036916.USD","symbol_name":"贝莱德美国增长A2 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INC"},"translate_title":"蔚来股票的严峻现实：三个残酷的事实注定了曾经有前途的电动汽车新贵","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"XPEV":1,"LI":1,"LCID":1,"NIO":1,"TSLA":1,"UPST":1,"NIO.SI":0.6,"EVS.SI":0.6,"09866":0.6},"content_text":"Meet Louis Navellier\t\t\n\n\n\n\n\nAs the situation remains unchanged, Nio (NIO) has tumbled down to even lower lows.\nThe EV maker faces slow sales growth, cash burn, and likely shareholder dilution.\nExpect these three issues to continue dragging down Nio stock.\n \n\n\n\n \n\nSource: Michael Vi / Shutterstock.com\n\n\n\nSo far this month, Nio (NYSE:NIO) has continued sinking to new lows. At around $4 per share, Nio stock is not merely in penny stock territory. The Chinese EV play is now a full-on penny stock, and it’s likely to stay that way.\nWhy? Mostly, because the company’s dire situation remains unchanged. The many issues with Nio that we have discussed in past coverage of this struggling vehicle electrification play have not gone away.\nWorse yet, even as Nio bulls may point to certain factors suggesting better times ahead, the major negatives are likely to persist. Outweighing any positives, knocking NIO to even lower prices. \nA situation reminiscent of what’s going on with this EV “also-ran’s” U.S.-based counterparts, as we’ll once again explain below, there’s little reason to even consider buying this stock.\nNio Stock and its 3 Big Negatives\nThree key negatives have been in the driver’s seat, when it comes to NIO’s stock price declines over the past year. First, sluggish sales growth. Second, high cash burn. Third, the impact of prior and potential future shareholder dilution.\nBased on recent news, it’s clear that all three of this issues persist, and will likely continue to affect the performance of Nio stock. \nWhen it comes to sluggish growth, all you got to do is look at Nio’s latest vehicle delivery numbers. As we pointed out previously, Nio’s Q1 2024 deliveries fell 3% year-over-year, and by 10% on a quarter-over-quarter.\nCompare that to other China-based EV upstarts, like Li Auto (NASDAQ:LI) and Xpeng (NYSE:XPEV). These rival “China EV contenders” reported Q1 2024 deliveries growth of 50% and 20%, respectively. \nRegarding high cash burn, Nio reported negative operating cash flow of nearly $1.2 billion in 2023. Based on quarterly earnings forecasts, Nio is set to stay deep in the red.\nThis underscores the shareholder dilution risk. Nio has sold billion’s worth of newly issued shares to Abu Dhabi-backed investment vehicle CYVN, and could continue doing so, to raise the cash necessary to sustain additional operating losses.\nChina’s Tesla? More Like China’s Lucid!\nAt one point, Nio was considered to be China’s answer to Tesla (NASDAQ:TSLA). An EV maker on track to become a dominant brand globally. \nHowever, besides the fact that even Tesla itself isn’t doing so hot globally right now, Nio remains light years away from being an EV maker akin to Tesla.\nRather, it’s more like China’s answer to Lucid Group (NASDAQ:LCID). Granted, this isn’t an apples-to-apples comparison. \nNio is significantly ahead in scaling up production and sales. Nio sells more EVs in a month that Lucid has managed to sell over an entire year.\nThere are many similarities. Similar to Lucid, Nio was once considered a potential “Tesla killer.” \nAlso similar to Lucid, Nio has also struggled to expand its customer base. Not only that, the company’s relationship with CYVN is similar to that of Lucid’s relationship with Saudi Arabia’s Public Investment Fund.\nHence, it may not be out of the question to say that the future could play out for Nio much like it is likely to play out for Lucid. Safe to say, this isn’t the best outcome for Nio stock investors.\nThe Verdict: Still Set to Spiral Lower\nPIF is investing in Lucid, as part of Saudi Arabia’s efforts to diversify its economy. Besides selling additional shares to PIF, Lucid has started building EVs in the Gulf oil kingdom. \nLikewise, CYVN is investing in Nio, as part of Abu Dhabi’s efforts to diversify its economy.\nWhile not yet building a Nio factory in Abu Dhabi, the company has licensed some of its technology to a CYVN affiliate. \nSimilar to the Lucid/PIF situation, CYVN could keep buying up newly issued Nio shares, increasing its ownership and influence, but watering down NIO’s per share value.\nFor now, this is our prognosis, as there’s no end in sight for Nio’s many problems. Yes, battery-swap station expansion and new vehicle model launches could change all of this. \nFor now, however, assume that Nio stock will keep spiraling to even lower prices.\nNIO stock earns a D rating in Portfolio Grader.\nOn the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.\nConsumer Discretionary, Automotive, Electric Vehicles \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nSubmit\n\n\n\n\n\n\n\n Louis Navellier\nEditor, Market 360\n\n\nMeet Louis Navellier\nLouis Navellier is one of Wall Street’s renowned growth investors. Providing investment advice to tens of thousands of investors for more than three decades, he has earned a reputation as a savvy stock picker and unrivaled portfolio manager.\n\n\n\t\t\t\tLearn more about Louis\t\t\t\n\n\n\n\n\nArticle printed from InvestorPlace Media, https://investorplace.com/market360/2024/04/nio-stocks-grim-reality-3-brutal-truths-dooming-the-once-promising-ev-upstart/.\n©2024 InvestorPlace Media, LLC","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2429946885"}