Is Nio a buy?

It’s time to breakdown another high-flying electric vehicle name. Here is the breakdown on $NIO, otherwise known as Nio.


Current Price: $59.85

52/Wk High: $66.99

52/Wk Low: $2.11


Market Cap: $94.1 Billion


Read below for the breakdown!


Nio ($NIO) is a Chinese based electric vehicle company that designs, manufactures, and sells electric automobiles.


In recent news, Nio released its newest vehicle, the ET7 Sedan in which offers up to 600 miles of range and an autonomous lidar-based system.


Furthermore, just weeks ago Nio announced that deliveries increased by more than double over last year to a whopping 43,728 total vehicle deliveries.


None the less, Nio looks forward to expansion and announced plans in August to resume its international expansion plans in the backend of 2021.


Given the continual positive catalysts coming out of Nio, the stock has soared 1184% in the past year alone, very much mirroring the past actions seen out of electric vehicle leader Tesla.


Not only has Nio proven itself to retail investors but wall street is finally growing more bullish. Recently, Nomura initiated Nio with a buy, citing a top-down approach to its vehicle pipeline, the backing of the Chinese government, and a battery-as-a-service technology system.


Shifting into the numbers, Nio beat expectations, delivering a Q3 EPS of CNY -0.82, better than the expected EPS estimate of CNY -1.11. On a year over year basis, EPS improved 65.55%.


Nio reported solid revenues as well, with total revenues for Q3 totaling $666.6 million, representing an increase of 146.4% on a year over year basis.


As for vehicle sales themselves, total vehicle sales landed at $628.4 million, representing a 146.1% increase on a year over year basis.


When it comes to margins, quarterly vehicle margins reached 14.5% while quarterly gross margin totaled 12.9%, both of which improved significantly over the same time 2019 level.


Gross profit improved as well, with Q3 gross profit totaling $86.3 million, much better than the Q3 2019 gross loss of RMB221.6 million.


On the downside, Nio ran a loss from operations of $139.3 million and a net loss of $154.2 million. Rounding out the Q3 numbers, net loss attributable to Nio ordinary shareholders totaled $175 million.


When it comes to deliveries, Nio reported total 2020 Q3 deliveries level of 12,206, much better than the Q2 2020 level of 10,331 and Q3 2019 level of 4,799.


Shifting into the balance sheet, the numbers are not bad.


Total Debt: CNY 8.162 Billion


Total Liabilities: CNY 26.371 Billion

Total Assets: CNY 34.393 Billion

Cash & Short Term Inv: CNY 22.046 Billion


On a valuation basis, Nio is trading a premium.


Price to Sales: 50.49x


Price to Book: 59.08x


Management has work to do as well.


Return on Equity: -314.06%


Return on Assets: -26.47%


Return on Invested Capital: -56.95%


Given the numbers, the analysts are neutral with a mean price target of $59.40/share, representing a -0.16% downside.


It is important to note that the high price target is $80.30/share, representing a 34.97% gain, while the low price target is $30.00/share, representing a -49.57% loss.


The big money on the otherhand is much less involved, with just 33.55% of Nio being owned by institutions. Top holders include Baillie Gifford & Co., BlackRock Institutional Trust, and State Street Global Advisors.


On a technical basis, Nio is bullish with a long term upside trend. According to the six-month charts, the MACD is flat with minimal momentum around 3.59.


The six-month charts are also indicating an RSI of 59.68 and CCI of 70.11, both of which are on the high end.


In short, Nio is a solid company but has a long way to go to compete with the likes of Tesla, GM, and other auto giants jumping in on the electric vehicle trend.


EAT - SLEEP - PROFIT


Disclaimer: This is not direct financial advice, simply an opinion based on independent research.