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Drifterdrift
2021-03-08

Yes, let's do it

Get Ready To Buy These 3 EV Stocks While They're On Sale

Summary The EV trade had accelerated upwards through 2H '20, and has reversed course to start 2021,

Get Ready To Buy These 3 EV Stocks While They're On Sale

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SilverSoul
·2021-03-08
To the moon!!
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{"i18n":{"language":"en_US"},"data":{"magic":2,"id":329058409,"tweetId":"329058409","gmtCreate":1615193354701,"gmtModify":1704779331937,"author":{"id":3560833935144271,"idStr":"3560833935144271","authorId":3560833935144271,"authorIdStr":"3560833935144271","name":"Drifterdrift","avatar":"https://community-static.tradeup.com/news/07fccc4dc9d82ce718d36a416a46bf52","vip":1,"userType":1,"introduction":"","boolIsFan":false,"boolIsHead":false,"crmLevel":2,"crmLevelSwitch":0,"currentWearingBadge":{"badgeId":"7a9f168ff73447fe856ed6c938b61789-1","templateUuid":"7a9f168ff73447fe856ed6c938b61789","name":"Knowledgeable Investor","description":"Traded more than 10 stocks","bigImgUrl":"https://static.tigerbbs.com/e74cc24115c4fbae6154ec1b1041bf47","smallImgUrl":"https://static.tigerbbs.com/d48265cbfd97c57f9048db29f22227b0","grayImgUrl":"https://static.tigerbbs.com/76c6d6898b073c77e1c537ebe9ac1c57","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2021.12.21","individualDisplayEnabled":0},"individualDisplayBadges":[],"fanSize":2,"starInvestorFlag":false},"themes":[],"images":[],"coverImages":[],"extraTitle":"","html":"<html><head></head><body>Yes, let's do it&nbsp;</body></html>","htmlText":"<html><head></head><body>Yes, let's do it&nbsp;</body></html>","text":"Yes, let's do it","highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":1,"repostSize":0,"favoriteSize":0,"link":"https://ttm.financial/post/329058409","repostId":1134030314,"repostType":4,"repost":{"id":"1134030314","pubTimestamp":1615193175,"share":"https://www.laohu8.com/m/news/1134030314?lang=&edition=full","pubTime":"2021-03-08 16:46","market":"us","language":"en","title":"Get Ready To Buy These 3 EV Stocks While They're On Sale","url":"https://stock-news.laohu8.com/highlight/detail?id=1134030314","media":"seekingalpha","summary":"Summary\n\nThe EV trade had accelerated upwards through 2H '20, and has reversed course to start 2021,","content":"Summary\n<ul>\n <li>The EV trade had accelerated upwards through 2H '20, and has reversed course to start 2021, with rising rates and chip shortages some factors in the fall.</li>\n <li>Growth in personal EV still looks strong, especially in the key growth market China.</li>\n <li>While the signs of a bubble within EV/auxiliary sectors exist, it could be an opportunity to buy into three top names with positive long-term prospects.</li>\n</ul>\nElectric vehicle (\"EV\") and auxiliary industries are facing a whirlwind of selling pressure, stemming from rising rates threatening high-growth stocks on a macro level, to intra-industry trends with chip shortages affecting production. The EV megatrend still continues to rear its head, with dozens of newly public startups in pure-play areas like LiDAR, battery tech, and commercial/fleet EV. The speculative nature of new entrants being multiple quarters out from revenue generation or substantial revenue amounts, and established manufacturers hitting sky-high valuations, has led to some frothy trading recently. However, a handful of established EVs, namely in personal vehicles, look to provide an attractive entry price after a valuation reset - these include current industry leader Tesla (TSLA), and Chinese duo NIO (NIO) and XPeng (XPEV).\nForeword Note\nThe broader market has been digesting a heap of macro and fiscal factors recently, from the rollback of pandemic restrictions to rates and inflation; with that in mind, volatility within the markets such as what had been exhibited over the course of the past week with large intra-day swings could be set to continue for a period of time. If that is the case, the delicate valuations of high-flying EV stocks, including the ones mentioned here, could be subject to more downward pressure, especially given certain supply-side constraints.\n1) Tesla\nOne of the go-to picks in EV over the past few years has been Tesla, and shares have come to a sluggish start to 2021 after a monumental 2020. Shares crossed into a bear market territory for the YTD period early Friday morning, losing nearly one-third of its market cap since late January. Tesla's rise has helped usher in a new wave of EV adoption, and with high productivity growth, Tesla can further cement its status and growth ability atop the EV pyramid.\nWhile chip shortages still could impact the auto industry through 1H and early 2H '21, Tesla has secured a supply of nickel from Vale (VALE) which could ease any worries about battery cell shortages that have been floating around the EV sector, possibly weakening the blow relative to Chinese peers.\nSo what makes this an interesting buy point?Tesla has been a trendsetter for other EV OEMs as shares rode the roller coaster up and down over the past six months, yet the recent valuation reset has brought fairer forward looking multiples amid positive signs in internal developments.\nTesla still remains on track to break past its own implied delivery numbers, which sit at about 1.7 million in 2023 and 4 million by 2025, contingent on demand. With max capacity at just over 1 million currently, and planned buildouts of GF Austin and Berlin, and potential manufacturing capabilities inBengaluru(though that could be apt for energy storage), Tesla could see production capacity rise to 2 million by 2023, giving some cushion to deliveries. Ability to rapidly scale production after completion, like that in Shanghai, cement forward delivery growth.\nGrowth in deliveries is key to driving both revenues and market share higher, as there were some glimpses ofmarket share troublelate last year in China and Europe, as ICE manufacturers ramped up numbers and a heavily fragmented Chinese market saw consumers embrace micro-EVs. With planned deliveries in the millions in just a few years' time, Tesla could be able to reach nearly 1.5%global market sharein China, and over 1% in Europe by 2023.\nAs such, Tesla could see revenues jump to $68 billion by 2022, doubling again by 2025 to $125 billion driven by a strong Chinese market and capture of 2.5% global market share. Unlike some of the more mature European markets, China presents a huge market opportunity as EV expands rapidly, with growth forecast to 1.8 million vehicles for 2021. Yet demand and government support for EV development could see EV sales rise quicker than anticipated to over 3 million vehicles by 2022.\n<img src=\"https://static.tigerbbs.com/84d977704506bf56d1ee968ca255f5fa\" tg-width=\"669\" tg-height=\"725\">Source: McKinse\nWhile this is a positive for Tesla as well as both Chinese makers, discussed next, price competitiveness from locally-made models could be the key to unlocking that 2.5% global share from China due to high production capacities domestically and imported models.\nWith a projection at $68 billion by 2022, Tesla would trade at about 8.8x revenues, and about 4.6x FY25 revenues, represent some multiple consolidation after FY22 multiple sat at nearly 13x. Cybertruck and Semi slated for production this year and delivery next year could also boost revenues through entry into different market segments; Tesla has shown time and time again that demand is there for its vehicles.\nWhile these multiples do remain high relative to traditional ICE manufacturers, Tesla has traded at a premium due to disruptive ability and location 'ahead of the curve' for EV; should overarching market factors contributing to the EV slide persist, Tesla could see multiples shrink to 5.8x FY22 and 3.2x FY25 revenues if shares drop another 30% to a floor near the low $400s.\nSome risks to be aware offor Tesla at the moment are again, valuation, as well as increased competitive threats. For Tesla, valuation acts as a double-edged sword, with the constant chatter of persistent overvaluation relative to every metric, to undervaluation based on hypothetical scenarios within 'revolutionary' FSD and energy storage. Forward EV/revenues based on FY22 (two-year forward) sits at about 8.8x, far higher than historical around 3x.\nIncreased competitive threats from startups and ICE manufacturers could also threaten high growth rates in deliveries, as micro EVs in China have outpaced deliveries of other EVs despite being in a completely different market segment. Tesla looks to be able to weather that with future price deliveries or actually fulfilling the $25,000 vehicle promise. Consolidation will likely still occur within the EV, but Tesla's establishment as the leader could only see pressure on delivery forecasts.\nTesla still could be trading at multiples that suggest the company hits high-end targets for years to come even at the current valuation, yet the long-term picture within EV and within energy storage have yet to be fully realized.\n2) NIO\nChinese leader NIO had quite a year last year, after being bailed out from near bankruptcy to cementing itself at the forefront of the domestic EV cohort with strong delivery numbers.\nEven though NIO's mixed Q4 results did not impress due to slight currency impacts to EPS and forward looking commentary on deliveries from chip shortages, the company's long-term prospects remain intact. After anupbeat takeon earnings on 3/3, shares still dipped double-digits, down over 25% Friday morning before rebounded through the day - now, valuation has come down even further, while the same prospects remain.\nSo what makes this an interesting buy point?To recap the prior upbeat take, NIO's short-term performance will be impacted by chip and battery constraints, with monthly production run rate expected to decrease by 25% to 7,500 units for Q2, dampening QoQ growth from Q1's expected 20,000 to 20,500 to just 22,500 units. However, constraints are forecast to ease through 2H, allowing capacity to ramp back up to 9,000 to 10,000 units. This could push 2H deliveries significantly to 55,000 units, giving a full year forecast of 95,000 units to 105,000 units.\nDemand remains strong, with February's 5,528 units delivered during a shorter, holiday filled month impacting business days, as well as March's forecast sitting at the top end of the current production rate. NIO still has a major catalyst ahead this year, European expansion, with developments already underway there. Volume growth should allow margins to hover in the mid-teens, setting the manufacturer up to hit profitability by Q4 and annual profitability by FY22 at the earliest in an upside scenario.\nNIO's path for revenue growth to RMB33-34.5 billion (US$5.1-$5.3 billion) for FY21 still is preserved, with BaaS and ADaaS aiding vehicle volume growth. For FY22, production capacity can support 300,000 units and with less potential impacts from supply-side battery/chip constraints, deliveries should rise to 160,000 to 190,000 units, generating revenues of RMB60-65 billion (US$9.3-10.0 billion). NIO has also significantly solidified its balance sheet in just one year at a cost of high dilution, going from less than RMB0.09 cash per RMB1 of debt to RMB2.98 cash per RMB1 of debt - the company now looks to have secured safety from bankruptcy fears just four quarters ago.\nNIO is still witnessing the effects of the EV valuation crunch, with shares down over 50% in early Friday trading from a YTD high in early January. Now, two days later, NIO trades at about 11.5x projected FY21 revenues (down from 13.1x) and 6.2x projected FY22 revenues (down from 7.2x). For a company with impressive triple digit growth potential for FY21 and high double digit potential for FY22 for deliveries, with similar growth in revenues, multiple contraction during the valuation crunch provides attractive long-term entry or averaging down.\nSome of the risks associated with NIOinclude management's expectations for the chip shortages to clear in just four months' time, as well as increased competitive threats domestically from the fragmented market. While the market will react to what it perceives to be weakness, NIO could see impacts from chip shortages affecting production run rates through late Q2/early Q3, which could minimize the potential to beat delivery projections. European expansion could be a bit costly at the moment, and NIO could see costs associated with the network and service center buildout affect near-term margins, which recently hit a high, thus dampening the future profitability picture.\nPrice competition also is one risk to be aware of for NIO, and although it does have government backing due to 'poster child' intent to create a world-leading player in EV, the government can't force citizens to buy NIO's cars instead of a competitor's - hence the threat from Tesla looming after price reductions. NIO's unwillingness to enter other price segments and instead focus on premium segment sales could see it unable to capture the rapid growth in micro EV, and lose out overall domestic market share.\n3) XPeng\nXPeng has fared the worst of the three so far, with shares slipping over 40% since February, trading nearly one-third of all-time high in November in early Friday. However, the impacts bottlenecking current sales trajectory clearing by Q3 similar to the case with NIO, and the decline in valuation paired with first-mover status amongst the Chinese group in Europe are long-term positives.\nSo what makes this an interesting buy point?XPeng's deliveries for February cited CNY seasonality for the ~60% month-over-month decline to 2,223 units, although chip shortages are another highly likely factor. Even so, XPeng should be able to reach 12,500 units for Q1, leaving it on track to hit 57,500 units under strong seasonality and production run rates returning to normal in 2H (this is a slight decrease from a prior 65,000 unitprojectiondue to impacts from chip shortages coming to light).\nRevenues are poised to hit RMB13.2 billion (US$2.05 billion) for FY21, rising to RMB29.5 billion (US$4.50 billion) in 2020, supported by capacity expansion at Zhaoqing to max run rate of 100,000 annually, European expansion and strong Chinese demand. With valuation cut down significantly over the past weeks, XPeng trades at 10.7x FY21 revenues and 4.9x FY22. These multiples are slightly lower than NIO's, but that is to be expected due to differences in cumulative deliveries. Like NIO, XPeng raised a substantial amount of cash (nearly RMB30 billion in Dec.-Jan.), supporting growth efforts.\nXPeng's projected triple digit growth in revenues in the next two years stems down to the technological advancements within its vehicles, keeping demand high. Vehicles offer level 3 autonomous capabilities after the OTA upgrade earlier this calendar year, with more support for AD through Navigation Guided Pilot, in its beta version during Q1. Push for high levels of tech can serve as a driver for deliveries by differentiating XPeng's models from the competition.\nEuropean expansion is also a bright spot for XPeng, beating NIO to the market thereafter starting off with a small shipment of its G3 to Norway. More country expansion and expansion in Norway, a mature, well-equipped EV market, will serve as a driver for deliveries and potentially slightly higher model prices, aiding revenues. Capacity expansion through Guangzhou in 2023 can send more models to Europe, which could exhibit a similar rapid to 10,000 units within half a year.\nSome risks to be aware ofin XPeng are its margins, and a recent recall of the G3 from an inverter issue. Margins through Q3 were in the low-single digit, while NIO posted a mid-teen vehicle margin, rising to a high-teen through Q4. XPeng's margins are much smaller due to the deep focus on R&amp;D spend - advancing vehicles technologically comes at a cost - and due to this, operating expense leverage will prove difficult for another four to eight quarters, prolonging the path to profitability.\nThe recall of 13,339 units of the G3 for inverter issues causing a loss of power and posing safety risks could have served as a contributing factor for the weak February deliveries, but the other risk from recalls, should others occur, is the costs associated with solving them. While XPeng has the cash to do so, the potential to incur additional costs on top of operating expenses/R&amp;D spend will further pressure margins.\nConclusion\nThe EV trade had accelerated upwards through 2H '20, and has reversed course to start the year. The sector has the signs and makings of a bubble (such as easy access to capital - dilution/ATM offerings, debt/notes oversubscribing, etc., pre-revenue companies rushing to IPO, speculative betting, etc.), with rapid run-ups in valuations across the board, whether supported by revenues or not, if revenues were even being generated. As such, investing in the leaders could prove a safer bet, although volatility and downward pressures still could flourish for the next few weeks due to industry-wide factors and macro/fiscal factors. Although some issues had surfaced within the three recently, Tesla (TSLA), EVs cult leader, still has tremendous potential within revenue and delivery growth alongside supporting businesses; NIO (NIO) leads the domestic Chinese startup pack in terms of revenues and deliveries and has a bright forecast ahead with multiple catalysts; XPeng's (XPEV) capacity expansion and rapid scalability bode well for European expansion and domestic market share growth. This isn't to say that other EV names in this space aren't as good [Fisker (FSR) and Canoo (GOEV) are speculative bets with high potential], while others like QuantumScape (QS) could provide next-gen breakthrough technologies, but as a disconnect grows between EV growth and valuations, averaging into industry leaders at a discount provides an extra layer of safety ahead of potential industry consolidation.\n","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>Get Ready To Buy These 3 EV Stocks While They're On Sale</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\">\nGet Ready To Buy These 3 EV Stocks While They're On Sale\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-03-08 16:46 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4412098-get-ready-to-buy-3-top-ev-stocks-while-on-sale>seekingalpha</a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\nSummary\n\nThe EV trade had accelerated upwards through 2H '20, and has reversed course to start 2021, with rising rates and chip shortages some factors in the fall.\nGrowth in personal EV still looks ...\n\n<a href=\"https://seekingalpha.com/article/4412098-get-ready-to-buy-3-top-ev-stocks-while-on-sale\">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","XPEV":"小鹏汽车","TSLA":"特斯拉"},"source_url":"https://seekingalpha.com/article/4412098-get-ready-to-buy-3-top-ev-stocks-while-on-sale","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1134030314","content_text":"Summary\n\nThe EV trade had accelerated upwards through 2H '20, and has reversed course to start 2021, with rising rates and chip shortages some factors in the fall.\nGrowth in personal EV still looks strong, especially in the key growth market China.\nWhile the signs of a bubble within EV/auxiliary sectors exist, it could be an opportunity to buy into three top names with positive long-term prospects.\n\nElectric vehicle (\"EV\") and auxiliary industries are facing a whirlwind of selling pressure, stemming from rising rates threatening high-growth stocks on a macro level, to intra-industry trends with chip shortages affecting production. The EV megatrend still continues to rear its head, with dozens of newly public startups in pure-play areas like LiDAR, battery tech, and commercial/fleet EV. The speculative nature of new entrants being multiple quarters out from revenue generation or substantial revenue amounts, and established manufacturers hitting sky-high valuations, has led to some frothy trading recently. However, a handful of established EVs, namely in personal vehicles, look to provide an attractive entry price after a valuation reset - these include current industry leader Tesla (TSLA), and Chinese duo NIO (NIO) and XPeng (XPEV).\nForeword Note\nThe broader market has been digesting a heap of macro and fiscal factors recently, from the rollback of pandemic restrictions to rates and inflation; with that in mind, volatility within the markets such as what had been exhibited over the course of the past week with large intra-day swings could be set to continue for a period of time. If that is the case, the delicate valuations of high-flying EV stocks, including the ones mentioned here, could be subject to more downward pressure, especially given certain supply-side constraints.\n1) Tesla\nOne of the go-to picks in EV over the past few years has been Tesla, and shares have come to a sluggish start to 2021 after a monumental 2020. Shares crossed into a bear market territory for the YTD period early Friday morning, losing nearly one-third of its market cap since late January. Tesla's rise has helped usher in a new wave of EV adoption, and with high productivity growth, Tesla can further cement its status and growth ability atop the EV pyramid.\nWhile chip shortages still could impact the auto industry through 1H and early 2H '21, Tesla has secured a supply of nickel from Vale (VALE) which could ease any worries about battery cell shortages that have been floating around the EV sector, possibly weakening the blow relative to Chinese peers.\nSo what makes this an interesting buy point?Tesla has been a trendsetter for other EV OEMs as shares rode the roller coaster up and down over the past six months, yet the recent valuation reset has brought fairer forward looking multiples amid positive signs in internal developments.\nTesla still remains on track to break past its own implied delivery numbers, which sit at about 1.7 million in 2023 and 4 million by 2025, contingent on demand. With max capacity at just over 1 million currently, and planned buildouts of GF Austin and Berlin, and potential manufacturing capabilities inBengaluru(though that could be apt for energy storage), Tesla could see production capacity rise to 2 million by 2023, giving some cushion to deliveries. Ability to rapidly scale production after completion, like that in Shanghai, cement forward delivery growth.\nGrowth in deliveries is key to driving both revenues and market share higher, as there were some glimpses ofmarket share troublelate last year in China and Europe, as ICE manufacturers ramped up numbers and a heavily fragmented Chinese market saw consumers embrace micro-EVs. With planned deliveries in the millions in just a few years' time, Tesla could be able to reach nearly 1.5%global market sharein China, and over 1% in Europe by 2023.\nAs such, Tesla could see revenues jump to $68 billion by 2022, doubling again by 2025 to $125 billion driven by a strong Chinese market and capture of 2.5% global market share. Unlike some of the more mature European markets, China presents a huge market opportunity as EV expands rapidly, with growth forecast to 1.8 million vehicles for 2021. Yet demand and government support for EV development could see EV sales rise quicker than anticipated to over 3 million vehicles by 2022.\nSource: McKinse\nWhile this is a positive for Tesla as well as both Chinese makers, discussed next, price competitiveness from locally-made models could be the key to unlocking that 2.5% global share from China due to high production capacities domestically and imported models.\nWith a projection at $68 billion by 2022, Tesla would trade at about 8.8x revenues, and about 4.6x FY25 revenues, represent some multiple consolidation after FY22 multiple sat at nearly 13x. Cybertruck and Semi slated for production this year and delivery next year could also boost revenues through entry into different market segments; Tesla has shown time and time again that demand is there for its vehicles.\nWhile these multiples do remain high relative to traditional ICE manufacturers, Tesla has traded at a premium due to disruptive ability and location 'ahead of the curve' for EV; should overarching market factors contributing to the EV slide persist, Tesla could see multiples shrink to 5.8x FY22 and 3.2x FY25 revenues if shares drop another 30% to a floor near the low $400s.\nSome risks to be aware offor Tesla at the moment are again, valuation, as well as increased competitive threats. For Tesla, valuation acts as a double-edged sword, with the constant chatter of persistent overvaluation relative to every metric, to undervaluation based on hypothetical scenarios within 'revolutionary' FSD and energy storage. Forward EV/revenues based on FY22 (two-year forward) sits at about 8.8x, far higher than historical around 3x.\nIncreased competitive threats from startups and ICE manufacturers could also threaten high growth rates in deliveries, as micro EVs in China have outpaced deliveries of other EVs despite being in a completely different market segment. Tesla looks to be able to weather that with future price deliveries or actually fulfilling the $25,000 vehicle promise. Consolidation will likely still occur within the EV, but Tesla's establishment as the leader could only see pressure on delivery forecasts.\nTesla still could be trading at multiples that suggest the company hits high-end targets for years to come even at the current valuation, yet the long-term picture within EV and within energy storage have yet to be fully realized.\n2) NIO\nChinese leader NIO had quite a year last year, after being bailed out from near bankruptcy to cementing itself at the forefront of the domestic EV cohort with strong delivery numbers.\nEven though NIO's mixed Q4 results did not impress due to slight currency impacts to EPS and forward looking commentary on deliveries from chip shortages, the company's long-term prospects remain intact. After anupbeat takeon earnings on 3/3, shares still dipped double-digits, down over 25% Friday morning before rebounded through the day - now, valuation has come down even further, while the same prospects remain.\nSo what makes this an interesting buy point?To recap the prior upbeat take, NIO's short-term performance will be impacted by chip and battery constraints, with monthly production run rate expected to decrease by 25% to 7,500 units for Q2, dampening QoQ growth from Q1's expected 20,000 to 20,500 to just 22,500 units. However, constraints are forecast to ease through 2H, allowing capacity to ramp back up to 9,000 to 10,000 units. This could push 2H deliveries significantly to 55,000 units, giving a full year forecast of 95,000 units to 105,000 units.\nDemand remains strong, with February's 5,528 units delivered during a shorter, holiday filled month impacting business days, as well as March's forecast sitting at the top end of the current production rate. NIO still has a major catalyst ahead this year, European expansion, with developments already underway there. Volume growth should allow margins to hover in the mid-teens, setting the manufacturer up to hit profitability by Q4 and annual profitability by FY22 at the earliest in an upside scenario.\nNIO's path for revenue growth to RMB33-34.5 billion (US$5.1-$5.3 billion) for FY21 still is preserved, with BaaS and ADaaS aiding vehicle volume growth. For FY22, production capacity can support 300,000 units and with less potential impacts from supply-side battery/chip constraints, deliveries should rise to 160,000 to 190,000 units, generating revenues of RMB60-65 billion (US$9.3-10.0 billion). NIO has also significantly solidified its balance sheet in just one year at a cost of high dilution, going from less than RMB0.09 cash per RMB1 of debt to RMB2.98 cash per RMB1 of debt - the company now looks to have secured safety from bankruptcy fears just four quarters ago.\nNIO is still witnessing the effects of the EV valuation crunch, with shares down over 50% in early Friday trading from a YTD high in early January. Now, two days later, NIO trades at about 11.5x projected FY21 revenues (down from 13.1x) and 6.2x projected FY22 revenues (down from 7.2x). For a company with impressive triple digit growth potential for FY21 and high double digit potential for FY22 for deliveries, with similar growth in revenues, multiple contraction during the valuation crunch provides attractive long-term entry or averaging down.\nSome of the risks associated with NIOinclude management's expectations for the chip shortages to clear in just four months' time, as well as increased competitive threats domestically from the fragmented market. While the market will react to what it perceives to be weakness, NIO could see impacts from chip shortages affecting production run rates through late Q2/early Q3, which could minimize the potential to beat delivery projections. European expansion could be a bit costly at the moment, and NIO could see costs associated with the network and service center buildout affect near-term margins, which recently hit a high, thus dampening the future profitability picture.\nPrice competition also is one risk to be aware of for NIO, and although it does have government backing due to 'poster child' intent to create a world-leading player in EV, the government can't force citizens to buy NIO's cars instead of a competitor's - hence the threat from Tesla looming after price reductions. NIO's unwillingness to enter other price segments and instead focus on premium segment sales could see it unable to capture the rapid growth in micro EV, and lose out overall domestic market share.\n3) XPeng\nXPeng has fared the worst of the three so far, with shares slipping over 40% since February, trading nearly one-third of all-time high in November in early Friday. However, the impacts bottlenecking current sales trajectory clearing by Q3 similar to the case with NIO, and the decline in valuation paired with first-mover status amongst the Chinese group in Europe are long-term positives.\nSo what makes this an interesting buy point?XPeng's deliveries for February cited CNY seasonality for the ~60% month-over-month decline to 2,223 units, although chip shortages are another highly likely factor. Even so, XPeng should be able to reach 12,500 units for Q1, leaving it on track to hit 57,500 units under strong seasonality and production run rates returning to normal in 2H (this is a slight decrease from a prior 65,000 unitprojectiondue to impacts from chip shortages coming to light).\nRevenues are poised to hit RMB13.2 billion (US$2.05 billion) for FY21, rising to RMB29.5 billion (US$4.50 billion) in 2020, supported by capacity expansion at Zhaoqing to max run rate of 100,000 annually, European expansion and strong Chinese demand. With valuation cut down significantly over the past weeks, XPeng trades at 10.7x FY21 revenues and 4.9x FY22. These multiples are slightly lower than NIO's, but that is to be expected due to differences in cumulative deliveries. Like NIO, XPeng raised a substantial amount of cash (nearly RMB30 billion in Dec.-Jan.), supporting growth efforts.\nXPeng's projected triple digit growth in revenues in the next two years stems down to the technological advancements within its vehicles, keeping demand high. Vehicles offer level 3 autonomous capabilities after the OTA upgrade earlier this calendar year, with more support for AD through Navigation Guided Pilot, in its beta version during Q1. Push for high levels of tech can serve as a driver for deliveries by differentiating XPeng's models from the competition.\nEuropean expansion is also a bright spot for XPeng, beating NIO to the market thereafter starting off with a small shipment of its G3 to Norway. More country expansion and expansion in Norway, a mature, well-equipped EV market, will serve as a driver for deliveries and potentially slightly higher model prices, aiding revenues. Capacity expansion through Guangzhou in 2023 can send more models to Europe, which could exhibit a similar rapid to 10,000 units within half a year.\nSome risks to be aware ofin XPeng are its margins, and a recent recall of the G3 from an inverter issue. Margins through Q3 were in the low-single digit, while NIO posted a mid-teen vehicle margin, rising to a high-teen through Q4. XPeng's margins are much smaller due to the deep focus on R&D spend - advancing vehicles technologically comes at a cost - and due to this, operating expense leverage will prove difficult for another four to eight quarters, prolonging the path to profitability.\nThe recall of 13,339 units of the G3 for inverter issues causing a loss of power and posing safety risks could have served as a contributing factor for the weak February deliveries, but the other risk from recalls, should others occur, is the costs associated with solving them. While XPeng has the cash to do so, the potential to incur additional costs on top of operating expenses/R&D spend will further pressure margins.\nConclusion\nThe EV trade had accelerated upwards through 2H '20, and has reversed course to start the year. The sector has the signs and makings of a bubble (such as easy access to capital - dilution/ATM offerings, debt/notes oversubscribing, etc., pre-revenue companies rushing to IPO, speculative betting, etc.), with rapid run-ups in valuations across the board, whether supported by revenues or not, if revenues were even being generated. As such, investing in the leaders could prove a safer bet, although volatility and downward pressures still could flourish for the next few weeks due to industry-wide factors and macro/fiscal factors. Although some issues had surfaced within the three recently, Tesla (TSLA), EVs cult leader, still has tremendous potential within revenue and delivery growth alongside supporting businesses; NIO (NIO) leads the domestic Chinese startup pack in terms of revenues and deliveries and has a bright forecast ahead with multiple catalysts; XPeng's (XPEV) capacity expansion and rapid scalability bode well for European expansion and domestic market share growth. This isn't to say that other EV names in this space aren't as good [Fisker (FSR) and Canoo (GOEV) are speculative bets with high potential], while others like QuantumScape (QS) could provide next-gen breakthrough technologies, but as a disconnect grows between EV growth and valuations, averaging into industry leaders at a discount provides an extra layer of safety ahead of potential industry consolidation.","news_type":1},"isVote":1,"tweetType":1,"viewCount":97,"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":13,"xxTargetLangEnum":"ORIG"},"commentList":[{"id":3741023,"commentId":"3741023","gmtCreate":1615193863032,"gmtModify":1680779544284,"authorId":3563403277012456,"author":{"id":3563403277012456,"idStr":"3563403277012456","authorId":3563403277012456,"name":"SilverSoul","avatar":"https://static.tigerbbs.com/692e9e2f198854f2b357459085e07d4f","vip":1,"currentWearingBadge":{"badgeId":"972123088c9646f7b6091ae0662215be-3","templateUuid":"972123088c9646f7b6091ae0662215be","name":"Legendary Trader","description":"Total number of securities or futures transactions reached 300","bigImgUrl":"https://static.tigerbbs.com/656db16598a0b8f21429e10d6c1cb033","smallImgUrl":"https://static.tigerbbs.com/03f10910d4dd9234f9b5702a3342193a","grayImgUrl":"https://static.tigerbbs.com/0c767e35268feb729d50d3fa9a386c5a","redirectLinkEnabled":0,"hasAllocated":1,"isWearing":1,"stampPosition":0,"hasStamp":0,"allocationCount":1,"allocatedDate":"2023.03.10","exceedPercentage":"93.53%","individualDisplayEnabled":0,"individualDisplaySort":0,"categoryType":1100},"hat":"https://static.tigerbbs.com/4c5ceab71416b120bab4604c0754b52a","crmLevel":3,"crmLevelSwitch":1,"individualDisplayBadges":[]},"repliedAuthorId":0,"objectId":329058409,"objectIdStr":"329058409","type":1,"supId":0,"supIdStr":"0","prevId":0,"prevIdStr":"0","content":"To the moon!!","text":"To the moon!!","html":"To the moon!!","likeSize":0,"commentSize":0,"subComments":[],"verified":10,"allocateAmount":0,"commentType":"invalid","coins":0,"score":0}],"hasMoreComment":true,"orderType":2}