Chinese electric car maker Nio just reported its strongest delivery numbers to date–but upon closer inspection, things aren’t as they seem.
Are you a fan of art?
I certainly am.
Contrary to what some people may believe about me, given my combat sports/board sports affinity, I’m actually rather cultured.
Honestly, I can’t look at Van Gogh’s Starry Night and not feel something every time.
I may have difficulty putting those feelings into words, but I know that there’s something there other than just appreciation for a pretty picture.
That said, I’m still far from an art aficionado. I can appreciate art, but nobody is going to hire me as an art appraiser anytime soon.
But I know what I like and, more importantly, I know what I DON’T like.
For example, I know that Claude Monet is a MASTER painter and his work is revered all around the world by some of the most educated art critics to ever live.
But have you really looked at his work up close?
It looks like a two-year-old painted it.
I mean, from a distance, he paints some very beautiful landscapes and flowers–but if you really look up close, it just looks like a mess.
That’s why I’m calling Nio (NIO), a new Chinese-based electric vehicle company, the Monet of EV Companies.
Nio: The Monet of the EV World
If you look at Nio from a 30,000-foot view, it seems like a STRONG company…but when you get closer, you see what a mess it really is.
Nio’s advantage is that it’s a Chinese company based in China. While other EV manufacturers have been struggling to get or even find the parts they need to make their vehicles, Nio has had almost NO problem getting the needed components straight from the source.
I guess that’s what happens when you’ve got a Chinese government-backed Jianghuai Automobile Group actually making your cars…
This convenience is likely the main reason why Nio delivered 44% more cars they did at the same time the year before, giving the company’s overall revenue a 49% boost.
But (and you knew it was coming) those parts cost them big time. When you couple that with their investments in a new product line (they’re working on three new models), Nio actually posted a WHOPPING $340 million loss last quarter.
To make matters even WORSE, the company revealed a worse-than-expected revenue outlook for Q1 of 2022–and as you would expect, investors’ distaste led to a pretty big selloff that drove shares down last week.
How Bad Is It For Nio?
This is bad…really bad.
Nio’s stock has now lost nearly 40% of its value this year.
However, for some reason, analysts still believe that Nio is simply going through a few growing pains, and so the company touted as a direct rival to Tesla (TSLA) in China has a price target of $47. That’s more than double the current $20-ish that it’s sitting at now.
But I don’t buy it.
Not because I’m some EV expert, but because of Nio’s StockPower rating score, which couldn’t get any lower if it tried.
Seriously, it came in at a big fat ZERO.
What we know about the StockPower rating system is that stocks 80 and above beat the market by 3-to-1 and that stocks below that aren’t guaranteed to do anything.
But a stock that scores a ZERO?
That’s a death knell…
And it may be ringing for Nio.
But you never know. Just like Monet, Nio could turn this disaster into a masterpiece.
Stranger things have happened.
Look, somebody just paid over $60 million for a piece of digital art, so there’s no telling what can happen.
“Color is my daylong obsession, joy, and torment.” – Claude Monet