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EHang: Future Prospects Unchanged After Short Report

Mar. 10, 2021 4:04 AM ETEHang Holdings Limited (EH)81 Comments
WY Capital profile picture
WY Capital


  • The Wolfpack report is chock-full of inaccuracies, most of which have been addressed by management.
  • EHang is clearly the first mover in eVTOL with most competitors still several years away from commercialization.
  • Commercialization is coming this year and should drive a substantial acceleration in revenue growth.
  • Their unmanned drone business could be worth several hundred million dollars based on competitor valuations.

With almost any innovative product, there will be criticism, and in EHang's (NASDAQ:EH) case, this came in the form of a short report from Wolfpack. While the report has killed off the short-term momentum for EHang, I believe the fundamentals remain intact and EHang will prove the shorts wrong.

Debunking the report

From the beginning, I had no clue why Wolfpack would target a company like EHang that has:

  1. Dozens of videos on YouTube demonstrating their product
  2. Highly reputable investors and customers like DHL and United Therapeutics
  3. Actually sold a substantial number of their AAVs to customers

While I was worried at first that EHang was just going to issue a generic statement about the report being false, they actually sent out a series of press releases and videos that really showed incredible transparency.

Firstly, they sent out an interview with the CEO that quickly refuted most of the points in the report, including hobby grade motors, the EHang Guangzhou lawsuit, R&D spend, etc. There was no need to spend too much time on each accusation as Wolfpack provided no evidence for their claims.

Next, they sent out a press release announcing an investor day at their Yunfu facility in June 2021. I don't think any company with things to hide would willingly allow dozens of investors to view their operations.

Lastly, they sent out a press release with details regarding the Kunxiang contract. In my blog post, I mentioned that even if Kunxiang was EHang's largest customer, it would only make up 24% of revenues, and this was confirmed by management. Management has further confirmed that over 70% of these revenues have been collected and the sale terms of EHang 216s to Kunxiang was not different from the sale terms to other customers.

Source: EHang

At this point, every

This article was written by

WY Capital profile picture
Looking out for underrated companies that could shape the future of humanity, or just provide strong returns over the long run. Note that my opinions could change after conducting more research or based on anything, honestly. DYODD

Analyst’s Disclosure: I am/we are long EH. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (81)

Just bought a little bit at 22.80. Someone bring me to my senses! Just think it might technically bounce from here?
The Golden Twenties profile picture
Anyone seen the new Morgan Stanley & EHang video on YouTube? Worth a watch.
@The Golden Twenties nothing really new and no comment on the financial report...
The Golden Twenties profile picture
@SpekulatiusMaximus true, I’d also like to know about the financial report asap. I did like the competitor analysis and the sector growth projection though. Alone the coverage of Morgan Stanley is somewhat positive too.
@The Golden Twenties Yes, but it most important is "delivery" for me now. The "Vision" is clear, allthough it can or must be modified.
Performance is a nightmare!
Nothing has changed, literally.
This is going back to 7s, where it belongs.
Where are those you tubers?
FACC built this drone with existing technology. If it gets licensed the plan will be to build inferior copies in China. Probably these were the ones examined with the 'hobby grade' motors. There's no IP at all. What have EH got that anybody else couldn't copy immediately if electric drone travel was ever to become a thing?
The Golden Twenties profile picture
@spynage EH has over 300 patents, they are ahead of competition regarding time and I personally think they will be backed by China sooner or later as a UAV equivalent of Nio. China wants to be leading in any future sector and tends to push their home players to be competitive globally. Plus I expect EH to dominate the Chinese market which might be the biggest one and should be easier in terms of regulation compared to the US or Europe. The mix from over 1bn people, high city density, low regulatory standards and government support gives them an ideal entry market to start operations and collect thousands of flying hours to then move to other markets. UAV companies from the US will have it much harder to get to that point.

When it comes aircraft, most of the technology is not 'new' just iterations on previous designs. While anyone could hypothetically put a large drone together, by the time you have all the people and facilities needed to make something that's commercially viable, you may as well have just designed the drone yourself.

A large part of an aircraft companies value comes from the infrastructure to produce/design large numbers of aircraft, not just a prototype.
Ru Chern Chong profile picture
@The Golden Twenties I would say the UAV equivalent of BYD in China.
What a fairy tale joke this was. I wonder where those pumpers are hiding now
@endoftime In Hawaii with their money
@endoftime What do you mean? What changed about Ehang?
Don’t drag me back in here with your nonsense question
The EHang story starts to come a cropper......well all things have their day......sincerely hope all of you buy and hold investors didn't fall for this PR hype-machine and you listened to a few of us in this thread that have been around the block with these types of PRC companies (and especially whom backed them).

As EH most likely descends back into the teens, it might become a lottery play, maybe worth a look, but nothing more (at the moment).

The best of luck to you all
Only 0,72% of free float owned by institutional Investors. 0.72%. Following your bullish thesis, would mean in context: all the institutionals in the US, all of them, the ENTIRE FINANCIAL BUSINESS of the United States is wrong. Or late. But you think, you are in front. Of the next big thing. 

Think about that twice.
AviLTI profile picture
Ehang said they will take a legal action against Wolfpack.
So far I haven't seen any update about it
anyone knows from previous experience with similar cases what should be a reasonable timeline for Ehang to file a lawsuit?
Thank you
On April 22, 2020, EH reported this:

"The E-port is planned to be completed and operational by around the end of 2020."

Does anyone know if this E-port was completed and operational?

Also, in trying to see how much it would cost to buy something from EH, I noticed that the website has no link to buy anything. I assume it is because it is illegal to sell their products in the US? But don't they have anything they could sell?

EH: $42.62 close
@Yahoo y I am from europe and just today in my country in daily newspaper on the title side is Ehang 216 and how they are working on ehang ports with restaurants in Italy, which are 30m above the ground and visitors will be transported there by Ehang 216. What a coincidence :P
@Majky Which newspaper?
@SpekulatiusMaximus I am from Slovakia, you dont know these newspaper.
The CEO lied in the CV about his education background. He claimed that he graduated from Tsinghua, but we cannot find his name on the Tsinghua University alumni list. This is 100% scam company.
@Gerry_Che do you understand "Mr. Hu attended Tsinghua University majoring in computer science from 1992 to 1997" that he made a degree?

--> I would say, that he only attendet, but didn´t finish the studies. So he won´t be in the alumni...
--> Normally you give the grade of the studies you made in the CV. As he did not do that, i would assume he didn´t finish it!

Am I wrong?
@Gerry_Che poor statement, if you dont have something useful to write here, better be quit and stop writing bs here. Your logic is same as If I wrote here Bill Gates didnt finish Harvard so Microsoft is scam...
@Majky LOL Bill Gates NEVER lied about his educational background, thanks.
I continued to hold all of my over-sized position in this. I think it has a lot further to run. I wasn't even tempted to sell on the big pop today (up 15%). It was my largest position, in fact, until I bought a lot of CFRX calls as I saw CFRX coming alive today. That is a stock I have been waiting to break out for the last year. It pays to watch your favorites like a hawk. And to buy when they are low. CFRX go the big BARDA contract I was waiting for. They got $86 mil out of the potential $106 mil. What a great day today has been in various ways.

The next month or so could be very interesting in the stock market. A ton of money is expected to make its way into the market as those stimulus checks hit peoples wallets. Much of the Robbinhood crowd is expected to put big $$$$ into the market (as a whole). Billionaires are going to continue to have lots of money to put in the market, too, IF interest rates continue to remain low.

Enjoy it while you can because we could have a very interesting October (as in bad). But it is too early to place the odds on that, yet.

EH: $ 51.30 close
WY Capital profile picture
@Yahoo y That BARDA contract came really late, thought it was going to arrive before the end of last year
@WY Capital The CEO sounded fairly confident that it was going to be announced by last Oct. However, Covid-19 problems slowed the process down. And like many others, we were all wondering what was going to become of it. But they were almost guaranteed to get something. And $86 mil was excellent news.

CFRX operates in a critical field. The gov is 100% behind them. Now, all they have to do is get through and pass that Interim study and then the final. The data looked fairly compelling, and I consider the chance of them having favorable results excellent. I'm giving it an 80% chance of having good news for the phase 3. I like those odds. When/if it passes, that should bring a tremendous increase in the stock price (well, unless it is $200/share by then, lol!).

CFRX: $6.35 close
WY Capital profile picture
@Yahoo y Finally bought CFRX, this selloff doesn't make any sense
I love EH! It was just so unfortunate that the short report came out...they should not be allowed to get away with that kind of false short report!
lew69sd profile picture
I like EH
but I love ACIC

I think Archer (ACIC) has more upside and they already have a flying cars Purchase Order for $1 billion from United Airlines.
"....I think EHang's AAV business is similar to Tesla's (NASDAQ:TSLA) electric car business in 2012...."

Ugh....at the moment, an absolute apples and oranges statement (TSLA had the playing EV field to itself from 2004 up to virtually 2014 despite what gasohaulic/diesel auto manufacturers were doing). This is something which is absolutely not true for EHang in this sector.... but whatever, if a hyperbolic statement is believed and serves to turn followers and subscribers on, then more power to the person.

Investors will need luck with EHang, and this comment has nothing to do with Wolfpack's stupid, self-serving trading press releases. Do yourself a favor and read completely through every thing EHang has filed so far since coming public, and then drill down on who are the complete set (don't look at just a few) of holders in the company are (hint: look at what else these same investors also are vested in). All is not what it appears, to say the least.

Then make your own informed decision.

The best of fortune to us all
@D. Rider I don't really know what you mean by that comment. The largest shareholder by far is the founder with 42% and the next largest is GGV with about 11%. GGV owns stakes in dozens of reputable companies.

Thought of you today, really don't know if you are a long-term holder, or just one of the legion of daytrader P & D-ers on SA.
About GGV......"...dozens of reputable companies?"

GGV is far from that. That you don't know that, or that you are pretending not to know it, makes it somewhat of an eye raiser.

Which country has garnered more Chinese expat and investment money that any country over the past 10 years/

Hmmm... go figure (and, no, it isn't the USA).

The best of fortune to us all
Drones are definitely the future of deliveries. I joined you today just over $44.00.
WP89 profile picture
There was something useful Short seller report too because now we got more transparency.
@WP89 wise words! The webpage is amazing now!
Excellent article, thank you!. EHang’s technology is very distruptive to logistics, firefighting, transportation and tourism. The company has built a tremendous moat with their 342 patents specifically in software engineering powering their UAV Command and Control tower. The Chinese government will give EHang all the needed support as China wants to build this new industry to become a major employer, be a first mover and a world leader in autonomous drones, incorporate it into new smart city management and then export it to the world. EHang’s amazing ability to have one man control a 1000 drones in a sky show illustrates capabilities that no other company possesses.
TCB2 profile picture
This video of first flight over China south sea is even nicer and with more stuff www.youtube.com/...
Despite the huge potential of its product, I think a few things need to be point out:

1. Inconsistency in unit price of EH216: During 2019 Q3, its revenue was 34.745 million RMB with 18 EH216 sold. But in 2020 Q3, its revenue jumped to 70 million RMB with 21 EH216 and 2 EH216F sold. Either some of its customers have really deep pocket and don't care about the cost or EHang has some other valuable revenue source it not willing to share with investors.

2. Quickly growing unrealized revenue: As wolfpack pointed out, majority of EHang's revenue hasn't been realized. It's 2020 Q2 and Q3 account receivable had expanded dramatically to an extend that Q3 - Q2 is larger than its gross profit in Q3.

3. Lack of strong institutional investor backing: Though the latest available data I can find was in 12/30/2020, so I won't rule out possibility that it suddenly got heavyweight backer in 2021 Q1.

4. Long range EVOTLs might not have same competitive advantage: As CEO of EHang pointed out, the longer range aerial vehicle will be fixed wing model, which is similar to what Archer and Joby have announced. So I'm not sure it still have advantage on that area as its advantage on shorter distance EVOTL as EH216 has demonstrated
WY Capital profile picture
@teslatothemoon You need to read the article:
1. EH doesn't make all its money from AAVs, it also generates revs from unmanned drones
2. EH sells on credit, nothing wrong with that
3. They literally got an investment from a major french institutional investor in Q1
4. Not even sure what this point is about, I literally discussed the competitive advantages in the article
@teslatothemoon Not only does all of this have dubious merit, it is incredibly short-sighted. None of it has anything to do with the long-term potential of the company. You’re thinking small.
@Rokunomics I actually holding EH share, I'm just being cautious in every investment and want to lay out my thought for some discussion, a long-term potential is not only based on promising product.
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