NIO Auto's stock can be described as a “financial roller coaster.” in2020A yearly surge of more than1000%After that, the stock began to fall from its all-time high, and the current market capitalization has evaporated86%.
in2020At the peak of the annual bubble, the market value of NIO Auto surpassed700One hundred million dollars, the company only sold that year4.3Ten thousand cars, and car manufacturers such as BMW2020It was sold in the year200The value of ten thousand cars is only500100 million dollars.
Over the past few years, the hype about electric car companies has subsided, and popular stocks like NIO Auto have returned to lull. After experiencing this drastic price adjustment, many people may think that NIO Auto may represent a good investment opportunity to enter the Chinese electric vehicle market, but in my opinion, this is not the case.
Next, I'll analyze why NIO Auto's stock is still highly overvalued at today's prices.
business model
NIO Auto's current model lineup includes7A variety of pure electric vehicles. All NIO products are equipped with cutting-edge technology, especially nowNT2.0Platform transition, the company invested a lot of resources to develop software applications aimed at improving vehicle functions and battery systems. NIO is not only an automobile manufacturer, but also a software company.
NIO Auto targets the high-end passenger car market, including medium to large luxurySUVsand sedans, the average starting price is over5Ten thousand dollars. Considering the average price of a car in China3.5At ten thousand dollars, NIO Auto's products are definitely aimed at the more affluent.
2022In the year, NIO Auto sold12.2Ten thousand pure electric vehicles. Although the company tried to expand its business internationally, almost all of the company's vehicles were delivered to the Chinese market.
In addition to selling electric vehicles, NIO Auto also develops and sells a variety of charging solutions for customers, including innovative power swaps, where customers can replace batteries with fully charged batteries instead of waiting to be charged. Currently, NIO Auto has already been built1000Multiple power exchange stations, expected to arrive2023This figure will double every year.
In addition to changing batteries, they also offer so-called “battery service” solutions (Battery as a service). As of2022Revenue generated by power solutions and others accounted for total future revenue at the end of the year8%.
Financial performance
Looking back at NIO Auto's past operating performance, the compound annual growth rate of the company's revenue77.49%, from2018Of the year7.19US$100 million will grow to2023Of the year71100 million dollars. The company's gross margin ranges from2021The annual average is equivalent to the industry average18%Down to2022Of the year10%.
NIO has yet to achieve profit.2022The year's operating loss will reach22100 million dollars.
Although it is difficult to balance payments, NIO Auto is in good financial condition, and the company's net cash position is22100 million dollars, with a current ratio of1.29, the debt-to-equity ratio is0.86.
Markets and risks
China's electric vehicle market is highly competitive, with hundreds of companies vying for market share. However, the undisputed king is BYD. BYD is2022Year to180Sales of 10,000 electric vehicles ranked first in China, followed by Tesla, which sold more than electric vehicles40Ten thousand vehicles. NIO was at the bottom of the ranking in intense competition with two other electric vehicle startups, Ideal Auto and Xiaopeng Motor.
Although large companies such as BYD and Tesla target the public with affordable models, NIO's pure electric vehicles do not directly compete with them. NIO targets the high-end market and currently has no intention of launching lower-priced models. NIO Auto's direct competitor should be Mercedes-Mercedes-Benz and BMW, although the latter two are not as technologically advanced as NIO, have electric versions of premium cars in their product lineup.
With the cancellation of national supplements, electric vehicle manufacturers began a price war to attract new customers. Coupled with the rise in lithium prices, the entire industry was seriously damaged. Since the beginning of this year, sales of electric vehicles have been slowing down, and NIO Auto has also been affected. The sales volume is only3.110,000 vehicles, year-on-year increase20%, but it's still far from reaching it2023Annual sales volume25Ten thousand units, equivalent to quarterly sales6.2The goal of ten thousand vehicles.
However, the company's management said that the slowdown in sales was due in part to an unfavorable product mix.
As for the price war, NIO's management believes that considering the company's cars focus on the high-end segment, the impact of the price war on NIO's business model will be limited because its wealthy customers are less susceptible to price changes.
projections
NIO Auto is still a high-end car manufacturer, and its business is mainly concentrated in the Chinese market.
Starting with revenue, the company's management expects2023Will be sold this year2510,000 cars, however, given the slowdown in electric vehicle sales so far, I think2023NIO can only be sold during the year2010,000 cars, year-on-year increase63%.
valuations
By calculation, I gave NIO Auto every share3.34Target price in dollars.
conclusions
Based on my analysis and assumptions, I think NIO Auto's current stock price is seriously overvalued.
Although I think NIO Auto will rank among the top automobile manufacturers in China, and NIO Auto's stock price has been drastically adjusted in the past two years, in my opinion, NIO Auto is still overvalued, and it's not a good investment opportunity now.
NIO Auto wants to unleash its intrinsic value only by expanding its target market, becoming a true international high-end automobile manufacturer, or targeting the low-income class in the Chinese market, but in the latter case, the company will have to face fierce competition from giants such as BYD and Tesla.