NIO - Embedded Expectations Analysis - 2019 06 26
NIO Inc. (NIO:USA) currently trades at historical lows relative to UAFRS-based (Uniform) Assets, with a 1.3x Uniform P/B. At these levels, the market has muted expectations for the firm, while management has concerns about Chinese subsidy declines, net losses, the potential of the ES6 launch, and E-Town Capital's minority investment.Specifically, management may be concerned about their cost control efforts, declines in ES8 subsidies, softer Q1 demand, and net losses. Moreover, they may be exaggerating the progress of the ES6 launch, the potential of NIO China as a fundraising channel, and their ability to drive increased market demand through competitive features and price. In addition, they may be exaggerating the performance of their vehicles, their positive momentum and media feedback, and their outlook for ES6, particularly in terms of competitiveness. Finally, they may be concerned about E-Town Capital's minority stake investment, the efficacy of their one-click power solution network, and their ability to sustain share buybacks.
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