Finance: The Tesla of China is 'a simple inventory to keep away from,' investor says (NIO)



Nio, widely seen as the Tesla of China, is tumbling from its post-IPO high this week.

Nio, extensively seen because the Tesla of China, is tumbling from its post-initial public providing highs this week. "An unproven administration team alongside zero expertise in manufacturing automobiles makes this a simple inventory to keep away from," stated Mark Tepper, president of Strategic Wealth Partners.

  • Nio, extensively seen because the Tesla of China, is tumbling after its initial-public-offering highs.
  • Nio started to ship its first volume-manufactured car — the ES8 — to prospects on June 28, and began to generate income this year.
  • "An unproven management team along zero experience in manufacturing cars makes this an easy stock to steer clear of," stated Mark Tepper, president of Strategic Wealth Partners.
  • Watch Nio trade in real time here.

Nio, extensively seen because the Tesla of China, is tumbling this week, which echoes an investor's bearish view.

"Nio's not a stock we have any interest in," stated Mark Tepper, president and CEO of Strategic Wealth Partners, managing over $1 billion in belongings. "An unproven management team along zero experience in manufacturing cars makes this an easy stock to steer clear of."

Nio has gained 21% for the reason that firm's preliminary public providing on September 12. Shares priced at $6.26 apiece, the low finish of its vary, inflicting the electric-car maker to fall wanting elevating the $1.eight billion it had sought. But someday after its lackluster debut, the inventory soared 75%, sending its market capitalization above $12 billion — regardless of Bernstein analyst Robin Zhu assigning an "underperform" rating and saying he thinks a capital elevate is coming within the subsequent 12 to 18 months.

Now with the shares sliding from their post-IPO excessive, Nio's market cap has dropped beneath $eight billion. But the corporate remains to be overvalued based mostly on its gross sales, in keeping with Tepper. "With $7 million of sales and an $8 billion market cap, we can’t justify owning it," he stated.

The Tencent-backed electric-car startup delivered its first volume-manufactured car — the ES8 — to customers on June 28, and began to generate income this year, in keeping with its IPO filing. Nio stated it generated income of $6.95 million within the first half of 2018, and that it had 6,201 unfilled ES8 reservations by the tip of August, for which non-refundable deposits had been made however prospects could nonetheless cancel their orders.

And for Nio, scaling manufacturing might take a while. Tesla has suffered by means of manufacturing issues practically each time it rolled out a brand new mannequin.

In July 2017, CEO Elon Musk warned Tesla would face manufacturing challenges for "at least six months of production hell" because it ramped up Model three manufacturing to 500,000 per year. The electric-car maker endured even bigger manufacturing hell with its earlier three automobiles, the unique Roadster, the Model S sedan, and the Model X SUV, Musk instructed Business Insider.

"Look at Tesla’s recent struggles," Tepper stated. "That makes it even less attractive for us."

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