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2023-07-04

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NIO: This Bounce Has Juice

Andy Feng After a big foreign investment, NIO Inc. (NYSE:NIO) finally has some life back in the business and the stock. The Chinese electric vehicle ("EV") manufacturer ended Q2 on a positive note and

NIO: This Bounce Has Juice

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(NYSE:NIO) finally has some life back in the business and the stock. The Chinese electric vehicle (\"EV\") manufacturer ended Q2 on a positive note and","content":"<html><head></head><body><h2 style=\"text-align: left;\">Summary</h2><ul><li><p>NIO Inc. reported a rebound in June vehicle delivery sales after a couple of weak months.</p></li><li><p>The Chinese EV automaker forecasts a big rebound in 2H vehicle deliveries, leading to much higher gross margins.</p></li><li><p>The company just obtained a $740 million cash infusion in a bullish sign of the current march towards record vehicle deliveries.</p></li></ul><p>After a big foreign investment, <a href=\"https://laohu8.com/S/NIO\">NIO Inc.</a> finally has some life back in the business and the stock. The Chinese electric vehicle (&#34;EV&#34;) manufacturer ended Q2 on a positive note and appears poised for record deliveries in Q3. My investment thesis remains ultra Bullish on the stock, with a rally finally in sight.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d90cd28243cec115331b29371c0b5c6f\" alt=\"Finviz\" title=\"Finviz\" tg-width=\"991\" tg-height=\"422\"/><span>Finviz</span></p><h2>June Rebound</h2><p>NIO reported June deliveries of 10,707 EVs for a big rebound from April/May. The key to the investment story is further momentum into July on the launch of a couple of additional vehicles during June.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/81ee22281921c7229a517adfe185aaca\" alt=\"CnEVPost\" title=\"CnEVPost\" tg-width=\"640\" tg-height=\"339\"/><span>CnEVPost</span></p><p>After the June rebound, NIO has clear sights to record July and Q3 sales. The Chinese EV company has spent the last couple of years trying to capture consistent growth without much success.</p><p>As CnEVPost highlights, NIO needs to deliver 32,000 vehicles per month in the 2H to double sales in 2023 from the 122,486 units delivered last year. At the BoA 2023 Asia Conference, management reportedly made the following financial targets for the 2H:</p><ul><li><p>20K average monthly vehicle deliveries</p></li><li><p>Q3 gross margin - 10%</p></li><li><p>Q4 gross margin - 15%</p></li></ul><p>Going back to the monthly deliveries, NIO has struggled to deliver much more than 10K vehicles in any particular month. Outside of the last 2 months of 2022, the Chinese EV company has failed to even reach 14K monthly vehicle deliveries, so any month above 2OK, much less multiple months, would be momentous.</p><p>The major problem with the current vehicle delivery targets is that NIO would only deliver 120K units in the 2H after delivering just 55K in the 1H. The vehicle delivery total of 175K would definitely set a new annual delivery record, but NIO would end up far short of the target to double sales to ~250K for the year, questioning whether the company will even meet this new target.</p><p>The delivery targets aren&#39;t out of the question, considering <a href=\"https://laohu8.com/S/LI\">Li Auto</a> topped 32K deliveries in June, up 150% from only 11K last year.</p><h2>Cash Wasn&#39;t Needed</h2><p>A big part of the investment story in the last month was the investment by CYVN Holdings. Not only did the investment vehicle of the Abu Dhabi government invest nearly $740 million directly into acquiring 84,695,543 new shares at $8.72 per share, but also CYVN bought another 40,137,614 shares from <strong>Tencent Holdings</strong> (OTCPK:TCEHY) to acquire a total position of ~7%.</p><p>NIO ended Q1 with a cash balance of $5.5 billion, though the company does have ~$2.8 billion in debt to offset some of the cash balance. The agreement was more about a partner for international markets. The parties agreed to cooperate to jointly pursue opportunities in NIO&#39;s international business.</p><p>Based on the Q1 adjusted net loss of nearly $600 million and a similar loss in Q2, NIO probably saw the cash balance generally flat during Q2. The CYVN investment of $740 million should generally match the quarterly cash burn rate, leaving NIO in a strong cash balance position.</p><p>A big key to the 2H investment story is the ability of NIO to return the gross margin level back to 10% to 15% and shoot for a 20% gross margin. The company is forecasting a path to cutting the quarterly cash burn levels to where additional cash wasn&#39;t needed.</p><p>On the $3 billion sales target for Q4&#39;23, NIO would produce $450 million in gross profit after virtually nothing in Q1. The much smaller losses going forward reduce the need for more cash.</p><p>The stock bounced off a higher low around $8 following the equity investment. NIO appears headed in the right direction following the release of new models and the big investment. Besides, the Abu Dhabi government wouldn&#39;t invest over $1 billion in a Chinese EV automaker without some plans to push forward international operations and some knowledge that orders are progressing towards targets of over 20K per month in vehicle deliveries.</p><h2>Takeaway</h2><p>The key investor takeaway is that NIO stock is finally trading in a bullish manner after a tough couple of years since the stock topped above $60 in early 2021. The Chinese EV company appears poised for record monthly and quarterly deliveries based on the launch of new models, including the new ES6, ET5 Touring, and new ES8. The large equity investment is another sign of the sentiment change in NIO.</p><p>Investors should continue using NIO Inc. stock trading at all-time lows as an opportunity to invest in a promising Chinese EV automaker.</p><p>Editor&#39;s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.</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: This Bounce Has Juice</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: This Bounce Has Juice\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-07-04 11:46 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4615020-nio-this-bounce-has-juice><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryNIO Inc. reported a rebound in June vehicle delivery sales after a couple of weak months.The Chinese EV automaker forecasts a big rebound in 2H vehicle deliveries, leading to much higher gross ...</p>\n\n<a href=\"https://seekingalpha.com/article/4615020-nio-this-bounce-has-juice\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"09866":"蔚来-SW","NIO.SI":"蔚来","NIO":"蔚来"},"source_url":"https://seekingalpha.com/article/4615020-nio-this-bounce-has-juice","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2348402542","content_text":"SummaryNIO Inc. reported a rebound in June vehicle delivery sales after a couple of weak months.The Chinese EV automaker forecasts a big rebound in 2H vehicle deliveries, leading to much higher gross margins.The company just obtained a $740 million cash infusion in a bullish sign of the current march towards record vehicle deliveries.After a big foreign investment, NIO Inc. finally has some life back in the business and the stock. The Chinese electric vehicle (\"EV\") manufacturer ended Q2 on a positive note and appears poised for record deliveries in Q3. My investment thesis remains ultra Bullish on the stock, with a rally finally in sight.FinvizJune ReboundNIO reported June deliveries of 10,707 EVs for a big rebound from April/May. The key to the investment story is further momentum into July on the launch of a couple of additional vehicles during June.CnEVPostAfter the June rebound, NIO has clear sights to record July and Q3 sales. The Chinese EV company has spent the last couple of years trying to capture consistent growth without much success.As CnEVPost highlights, NIO needs to deliver 32,000 vehicles per month in the 2H to double sales in 2023 from the 122,486 units delivered last year. At the BoA 2023 Asia Conference, management reportedly made the following financial targets for the 2H:20K average monthly vehicle deliveriesQ3 gross margin - 10%Q4 gross margin - 15%Going back to the monthly deliveries, NIO has struggled to deliver much more than 10K vehicles in any particular month. Outside of the last 2 months of 2022, the Chinese EV company has failed to even reach 14K monthly vehicle deliveries, so any month above 2OK, much less multiple months, would be momentous.The major problem with the current vehicle delivery targets is that NIO would only deliver 120K units in the 2H after delivering just 55K in the 1H. The vehicle delivery total of 175K would definitely set a new annual delivery record, but NIO would end up far short of the target to double sales to ~250K for the year, questioning whether the company will even meet this new target.The delivery targets aren't out of the question, considering Li Auto topped 32K deliveries in June, up 150% from only 11K last year.Cash Wasn't NeededA big part of the investment story in the last month was the investment by CYVN Holdings. Not only did the investment vehicle of the Abu Dhabi government invest nearly $740 million directly into acquiring 84,695,543 new shares at $8.72 per share, but also CYVN bought another 40,137,614 shares from Tencent Holdings (OTCPK:TCEHY) to acquire a total position of ~7%.NIO ended Q1 with a cash balance of $5.5 billion, though the company does have ~$2.8 billion in debt to offset some of the cash balance. The agreement was more about a partner for international markets. The parties agreed to cooperate to jointly pursue opportunities in NIO's international business.Based on the Q1 adjusted net loss of nearly $600 million and a similar loss in Q2, NIO probably saw the cash balance generally flat during Q2. The CYVN investment of $740 million should generally match the quarterly cash burn rate, leaving NIO in a strong cash balance position.A big key to the 2H investment story is the ability of NIO to return the gross margin level back to 10% to 15% and shoot for a 20% gross margin. The company is forecasting a path to cutting the quarterly cash burn levels to where additional cash wasn't needed.On the $3 billion sales target for Q4'23, NIO would produce $450 million in gross profit after virtually nothing in Q1. The much smaller losses going forward reduce the need for more cash.The stock bounced off a higher low around $8 following the equity investment. NIO appears headed in the right direction following the release of new models and the big investment. Besides, the Abu Dhabi government wouldn't invest over $1 billion in a Chinese EV automaker without some plans to push forward international operations and some knowledge that orders are progressing towards targets of over 20K per month in vehicle deliveries.TakeawayThe key investor takeaway is that NIO stock is finally trading in a bullish manner after a tough couple of years since the stock topped above $60 in early 2021. The Chinese EV company appears poised for record monthly and quarterly deliveries based on the launch of new models, including the new ES6, ET5 Touring, and new ES8. The large equity investment is another sign of the sentiment change in NIO.Investors should continue using NIO Inc. stock trading at all-time lows as an opportunity to invest in a promising Chinese EV automaker.Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","news_type":1},"isVote":1,"tweetType":1,"viewCount":358,"commentLimit":10,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"symbols":[],"verified":2,"subType":0,"readableState":1,"langContent":"EN","currentLanguage":"EN","warmUpFlag":false,"orderFlag":false,"shareable":true,"causeOfNotShareable":"","featuresForAnalytics":[],"commentAndTweetFlag":false,"andRepostAutoSelectedFlag":false,"upFlag":false,"length":6,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}