Leonhard Simon, do us a favor

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Yonhuat
2023-12-29

Leonhard Simon, do us a favor please, quit writing articles on Nio, you'll embarrass yourself.

NIO: Avoid In 2024

NIO's stock has underperformed against the broader market in recent months.Despite the rise in deliveries, NIO's bottom line continues to suffer.The company is likely to continue to burn cash at an un

NIO: Avoid In 2024

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{"i18n":{"language":"en_US"},"data":{"magic":2,"id":257326013096112,"tweetId":"257326013096112","gmtCreate":1703857771020,"gmtModify":1703857775020,"author":{"id":4097900715273400,"authorId":4097900715273400,"authorIdStr":"4097900715273400","name":"Yonhuat","avatar":"https://static.tigerbbs.com/a4ab9f0ed4305d88e3767c39675cedf3","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":6,"crmLevelSwitch":1,"currentWearingBadge":{"badgeId":"44212b71d0be4ec88898348dbe882e03-3","templateUuid":"44212b71d0be4ec88898348dbe882e03","name":"President Tiger","description":"The transaction amount of the securities account reaches $1,000,000","bigImgUrl":"https://static.tigerbbs.com/fbeac6bb240db7da8b972e5183d050ba","smallImgUrl":"https://static.tigerbbs.com/436cdf80292b99f0a992e78750ac4e3a","grayImgUrl":"https://static.tigerbbs.com/506a259a7b456f037592c3b23c779599","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2021.12.24","exceedPercentage":"93.62%","individualDisplayEnabled":0},"individualDisplayBadges":[],"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"html":"<html><head></head><body><p>Leonhard Simon, do us a favor please, quit writing articles on Nio, you'll embarrass yourself.</p></body></html>","htmlText":"<html><head></head><body><p>Leonhard Simon, do us a favor please, quit writing articles on Nio, you'll embarrass yourself.</p></body></html>","text":"Leonhard Simon, do us a favor please, quit writing articles on Nio, you'll embarrass yourself.","highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"link":"https://ttm.financial/post/257326013096112","repostId":2395974290,"repostType":2,"repost":{"id":"2395974290","pubTimestamp":1703808802,"share":"https://www.laohu8.com/m/news/2395974290?lang=&edition=full","pubTime":"2023-12-29 08:13","market":"us","language":"en","title":"NIO: Avoid In 2024","url":"https://stock-news.laohu8.com/highlight/detail?id=2395974290","media":"seekingalpha","summary":"NIO's stock has underperformed against the broader market in recent months.Despite the rise in deliveries, NIO's bottom line continues to suffer.The company is likely to continue to burn cash at an un","content":"<html><head></head><body><ul style=\"\"><li><p>NIO&#39;s stock has underperformed against the broader market in recent months.</p></li><li><p>Despite the rise in deliveries, NIO&#39;s bottom line continues to suffer.</p></li><li><p>The company is likely to continue to burn cash at an unsustainable rate and dilute its shareholders at the same time.</p></li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/2969919c5afd428a09eea5d5084234ed\" tg-width=\"750\" tg-height=\"500\"/></p><p>Leonhard Simon</p><p></p><p>NIO (NYSE:NIO) has underperformed against the broader market since late September when my latest article on the company was published, and I don&#39;t see any major catalysts that could help the company improve its operations and help the stock to aggressively appreciate in the long run. At the same time, there are reasons to believe that NIO will continue to underperform and burn cash since there&#39;s no indication that the business would be able to thrive in the current competitive environment in the EV industry.</p><h2 id=\"id_71035686\">Major Challenges Ahead</h2><p>Earlier this month, NIO reported its Q3 earnings results, which showed that its revenues increased by 46.6% Y/Y to $2.61 billion, but were below the estimates by $50 million. At the same time, while the company expects to deliver between 47,000 to 49,000 vehicles in Q4, which would result in ~150,000 deliveries in FY23, it won&#39;t meet the initial target of delivering 250,000 vehicles that was announced earlier this year.</p><p>Another major issue that needs to be mentioned is that NIO is likely going to remain unprofitable in the following years due to the ongoing price war within the EV industry that has been suppressing the margins. In Q3, NIO&#39;s vehicle margin was 11%, up Q/Q, but down from 16.4% a year ago.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/0c571a58d0469e6c4aa712d82015553e\" tg-width=\"640\" tg-height=\"265\"/></p><p>NIO&#39;s Vehicle Margin (Seeking Alpha)</p><p></p><p>The decline in margins has already resulted in an unsustainable cash burn rate for NIO. The company continues to burn over half a billion dollars each quarter and the only reason why it managed to avoid a liquidity crisis is due to the pricing of a secondary offering below the market prices at the expense of existing shareholders. The rise in cash reserves in Q3 has come not from operations but from the additional injection of liquidity thanks to the secondary offering, which I&#39;ve mentioned in my latest article on the company.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/90b56d43a282ce08d90d899a8f160197\" tg-width=\"640\" tg-height=\"203\"/></p><p>NIO&#39;s Cash Reserves (Seeking Alpha)</p><p></p><p>What&#39;s more is that yesterday, NIO closed a $2.2 billion strategic equity investment from the Abu Dhabi-based fund CYVN Holdings. Under the deal, NIO has issued close to 300,000 new ordinary shares at the price of $7.50 per share, which is below the current market price, to CYVN which now has a ~20% stake in the company.</p><p>While the additional liquidity would certainly extend NIO&#39;s lifeline and give its management more time to figure out how to become profitable, the injection of liquidity also comes at a major cost to ordinary shareholders. NIO&#39;s share count has been gradually increasing each quarter as a result of such secondary offerings and at the end of Q3, its share count stood at 1.74 billion, up by ~5% Q/Q. Such deals below the market prices are diluting ordinary shareholders and making their investments in the company less attractive due to the rising share count.</p><p>Another thing that needs to be mentioned is that there&#39;s no guarantee that the injection of additional funds will help the company become profitable or even greatly improve vehicle margins anytime soon. After all, despite pricing secondary offerings and diluting its existing shareholders in the past, NIO failed to drastically improve its operations and avoid raising new funds. What&#39;s more is that despite delivering ~122,000 vehicles in 2022, its market share in China accounted for less than 1%. With ~150,000 deliveries expected this year, it&#39;s hard to see how NIO would be able to drastically improve its performance and mitigate the downside caused by the ongoing price war within the EV industry.</p><p>Considering all of this, it would be safe to say that NIO&#39;s upside is currently limited. Most of its margins are negative, it has received dozens of downside revisions in recent months, and its shares trade at over 2 times the company&#39;s sales with no signs of profitability in sight. With such data, it&#39;s almost impossible to make a proper valuation model to figure out what is the company&#39;s fair value in the current environment. Even though the street expects NIO to become profitable somewhere in 2026, there&#39;s no guarantee that that&#39;s going to be the case, especially if the price war within the EV industry won&#39;t be over by that time. What&#39;s more is that at the current cash burn rate, it&#39;s most likely that the company would be required to raise more cash and dilute its shareholders even more, despite the fact that it recently received additional liquidity.</p><h2 id=\"id_2546246271\">Geopolitical Risks To Consider</h2><p>What&#39;s also important to understand is that NIO has been actively looking for ways to expand its presence in other markets in order to mitigate the downside caused by the price war and the weaker growth of the Chinese economy. However, unlike Tesla (TSLA), NIO expands at a time when globalization slowly unraveling, and it becomes much harder to get access to other markets. While NIO still targets a launch in the United States in the future, the worsening of Sino-American relations and the implementation of protectionism policies are likely to prevent it from successfully expanding its presence in the American continent anytime soon.</p><p>What&#39;s more, is that it seems that NIO will also be unable to quickly expand its presence in Europe as well. The company is currently selling less than 1000 vehicles per quarter in Europe and the potential trade war between China and the European Union could undermine any growth efforts of NIO in the old continent.</p><h2 id=\"id_2016679895\">Is There Any Upside Left?</h2><p>There&#39;s one thing that could undermine my bearish thesis, and that&#39;s the aggressive ramp-up of deliveries that could expand NIO&#39;s market share within the Chinese EV industry. By shifting to the OEM model, NIO could exceed the vehicle delivery expectations for next year and make shareholders invest in the company&#39;s growth story, which could keep the momentum going for longer and push the shares higher in the near term.</p><p>While the potential ramp-up of deliveries is unlikely to improve the company&#39;s bottom-line performance due to the suppression of margins caused by external factors, it could nevertheless improve the overall sentiment and make the fundamentals less relevant for a while. Other than that, it&#39;s hard to see any positives of investing in NIO for the long run until the cash burn issue is fixed.</p><h2 id=\"id_3075326640\">The Bottom Line</h2><p>While NIO&#39;s shares gained momentum due to finding a technical support level and having a successful car event, they likely won&#39;t be able to significantly appreciate in the long run due to the constant dilution and an unsustainable cash burn rate. Even though it&#39;s a good thing that the company won&#39;t face a liquidity crunch anytime soon thanks to the recent injection of liquidity, it&#39;s still hard to see how NIO would be able to drastically improve its bottom-line performance given the suppression of margins and a lack of major growth catalysts.</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: Avoid In 2024</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: Avoid In 2024\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-12-29 08:13 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4660154-nio-stock-avoid-in-2024><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>NIO's stock has underperformed against the broader market in recent months.Despite the rise in deliveries, NIO's bottom line continues to suffer.The company is likely to continue to burn cash at an ...</p>\n\n<a href=\"https://seekingalpha.com/article/4660154-nio-stock-avoid-in-2024\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"LU0820562030.AUD":"ALLIANZ INCOME AND GROWTH \"AMH2\" (AUDHDG) H2 INC","LU2063271972.USD":"富兰克林创新领域基金","TSLA":"特斯拉","BK4527":"明星科技股","NIO":"蔚来","BK4526":"热门中概股","BK4588":"碎股","BK4550":"红杉资本持仓","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0823414478.USD":"法巴经典能源转换基金","LU0466842654.USD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"A\" (USD) ACC","LU0689472784.USD":"安联收益及增长基金Cl AM AT Acc","NIO.SI":"蔚来","LU2326559502.SGD":"Natixis Loomis Sayles US Growth Equity P/A SGD-H","LU2087621335.USD":"ALLSPRING GLOBAL FACTOR ENHANCED EQUITY \"A\" (USD) ACC","LU1852331112.SGD":"Blackrock World Technology Fund A2 SGD-H","BK4551":"寇图资本持仓","BK4574":"无人驾驶","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC","LU1861215975.USD":"贝莱德新一代科技基金 A2","BK4505":"高瓴资本持仓","BK4581":"高盛持仓","LU1548497426.USD":"安联环球人工智能AT Acc","BK4504":"桥水持仓","LU1861220033.SGD":"Blackrock Next Generation Technology A2 SGD-H","LU0052750758.USD":"富兰克林中国基金A Acc","LU0820561818.USD":"安联收益及增长平衡基金Cl AM DIS","LU0320764599.SGD":"FTIF - Templeton China A Acc SGD","BK4099":"汽车制造商","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC","LU2602419157.SGD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"AC\" (SGD) ACC","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","LU1720051108.HKD":"ALLIANZ GLOBAL ARTIFICIAL INTELLIGENCE \"AT\" (HKD) ACC","LU0234570918.USD":"高盛全球核心股票组合Acc Close","BK4592":"伊斯兰概念","LU1429558221.USD":"Natixis Loomis Sayles US Growth Equity RA USD","LU1839511570.USD":"WELLS FARGO GLOBAL FACTOR ENHANCED EQUITY \"I\" (USD) ACC","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","LU0823411888.USD":"法巴消费创新基金 Cap","LU0708995583.HKD":"TEMPLETON CHINA \"A\" (HKD) ACC","LU0082616367.USD":"摩根大通美国科技A（dist）","BK4585":"ETF&股票定投概念","LU0056508442.USD":"贝莱德世界科技基金A2","LU0719512351.SGD":"JPMorgan Funds - US Technology A (acc) SGD","09866":"蔚来-SW","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","BK4509":"腾讯概念","LU0234572021.USD":"高盛美国核心股票组合Acc"},"source_url":"https://seekingalpha.com/article/4660154-nio-stock-avoid-in-2024","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2395974290","content_text":"NIO's stock has underperformed against the broader market in recent months.Despite the rise in deliveries, NIO's bottom line continues to suffer.The company is likely to continue to burn cash at an unsustainable rate and dilute its shareholders at the same time.Leonhard SimonNIO (NYSE:NIO) has underperformed against the broader market since late September when my latest article on the company was published, and I don't see any major catalysts that could help the company improve its operations and help the stock to aggressively appreciate in the long run. At the same time, there are reasons to believe that NIO will continue to underperform and burn cash since there's no indication that the business would be able to thrive in the current competitive environment in the EV industry.Major Challenges AheadEarlier this month, NIO reported its Q3 earnings results, which showed that its revenues increased by 46.6% Y/Y to $2.61 billion, but were below the estimates by $50 million. At the same time, while the company expects to deliver between 47,000 to 49,000 vehicles in Q4, which would result in ~150,000 deliveries in FY23, it won't meet the initial target of delivering 250,000 vehicles that was announced earlier this year.Another major issue that needs to be mentioned is that NIO is likely going to remain unprofitable in the following years due to the ongoing price war within the EV industry that has been suppressing the margins. In Q3, NIO's vehicle margin was 11%, up Q/Q, but down from 16.4% a year ago.NIO's Vehicle Margin (Seeking Alpha)The decline in margins has already resulted in an unsustainable cash burn rate for NIO. The company continues to burn over half a billion dollars each quarter and the only reason why it managed to avoid a liquidity crisis is due to the pricing of a secondary offering below the market prices at the expense of existing shareholders. The rise in cash reserves in Q3 has come not from operations but from the additional injection of liquidity thanks to the secondary offering, which I've mentioned in my latest article on the company.NIO's Cash Reserves (Seeking Alpha)What's more is that yesterday, NIO closed a $2.2 billion strategic equity investment from the Abu Dhabi-based fund CYVN Holdings. Under the deal, NIO has issued close to 300,000 new ordinary shares at the price of $7.50 per share, which is below the current market price, to CYVN which now has a ~20% stake in the company.While the additional liquidity would certainly extend NIO's lifeline and give its management more time to figure out how to become profitable, the injection of liquidity also comes at a major cost to ordinary shareholders. NIO's share count has been gradually increasing each quarter as a result of such secondary offerings and at the end of Q3, its share count stood at 1.74 billion, up by ~5% Q/Q. Such deals below the market prices are diluting ordinary shareholders and making their investments in the company less attractive due to the rising share count.Another thing that needs to be mentioned is that there's no guarantee that the injection of additional funds will help the company become profitable or even greatly improve vehicle margins anytime soon. After all, despite pricing secondary offerings and diluting its existing shareholders in the past, NIO failed to drastically improve its operations and avoid raising new funds. What's more is that despite delivering ~122,000 vehicles in 2022, its market share in China accounted for less than 1%. With ~150,000 deliveries expected this year, it's hard to see how NIO would be able to drastically improve its performance and mitigate the downside caused by the ongoing price war within the EV industry.Considering all of this, it would be safe to say that NIO's upside is currently limited. Most of its margins are negative, it has received dozens of downside revisions in recent months, and its shares trade at over 2 times the company's sales with no signs of profitability in sight. With such data, it's almost impossible to make a proper valuation model to figure out what is the company's fair value in the current environment. Even though the street expects NIO to become profitable somewhere in 2026, there's no guarantee that that's going to be the case, especially if the price war within the EV industry won't be over by that time. What's more is that at the current cash burn rate, it's most likely that the company would be required to raise more cash and dilute its shareholders even more, despite the fact that it recently received additional liquidity.Geopolitical Risks To ConsiderWhat's also important to understand is that NIO has been actively looking for ways to expand its presence in other markets in order to mitigate the downside caused by the price war and the weaker growth of the Chinese economy. However, unlike Tesla (TSLA), NIO expands at a time when globalization slowly unraveling, and it becomes much harder to get access to other markets. While NIO still targets a launch in the United States in the future, the worsening of Sino-American relations and the implementation of protectionism policies are likely to prevent it from successfully expanding its presence in the American continent anytime soon.What's more, is that it seems that NIO will also be unable to quickly expand its presence in Europe as well. The company is currently selling less than 1000 vehicles per quarter in Europe and the potential trade war between China and the European Union could undermine any growth efforts of NIO in the old continent.Is There Any Upside Left?There's one thing that could undermine my bearish thesis, and that's the aggressive ramp-up of deliveries that could expand NIO's market share within the Chinese EV industry. By shifting to the OEM model, NIO could exceed the vehicle delivery expectations for next year and make shareholders invest in the company's growth story, which could keep the momentum going for longer and push the shares higher in the near term.While the potential ramp-up of deliveries is unlikely to improve the company's bottom-line performance due to the suppression of margins caused by external factors, it could nevertheless improve the overall sentiment and make the fundamentals less relevant for a while. Other than that, it's hard to see any positives of investing in NIO for the long run until the cash burn issue is fixed.The Bottom LineWhile NIO's shares gained momentum due to finding a technical support level and having a successful car event, they likely won't be able to significantly appreciate in the long run due to the constant dilution and an unsustainable cash burn rate. Even though it's a good thing that the company won't face a liquidity crunch anytime soon thanks to the recent injection of liquidity, it's still hard to see how NIO would be able to drastically improve its bottom-line performance given the suppression of margins and a lack of major growth catalysts.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":204,"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,"upFlag":false,"length":80,"xxTargetLangEnum":"ORIG"},"commentList":[],"hasMoreComment":false,"orderType":2}