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NIO: Solid Buy But The U.S. 'Stock' Might Not Be Around For Long

Dec. 03, 2021 1:05 AM ETNIO Inc. (NIO)DIDIY104 Comments
Sandeep G. Rao profile picture
Sandeep G. Rao


  • NIO's high-quality vehicles and "battery-as-a-service" offering find solid favour in its affluent customer segment.
  • The company is poised to double in annual sales and hold steady its line item discipline (like in prior years) and start delivering new sedan models soon.
  • Stock performance isn't indicative of its valuation and has shown improvement over the past quarter.
  • Given its high-tech nature and upcoming HK listing, it is quite likely that the U.S.-listed "stock" will be meaningless by mid-2023 or even earlier.

NIO corporate headquarters in Silicon Valley

Sundry Photography/iStock Editorial via Getty Images

NIO Inc. (NYSE:NIO) – also called Shanghai Weilai Automobile Co., Ltd. in its motherland – is an electric vehicle (EV) carmaker that has long-held Western investor interest. Given the facts and the landscape, the company earns both a "guarded" as well as "modest" recommendation for inclusion

This article was written by

Sandeep G. Rao profile picture
Currently leading research at Leverage Shares, I have longstanding professional experience with financial markets. All views are my own and I can assure you that I smile sometimes. M.S.F, M.B.A., IIT Chicago. My Substack where I dig *deep* into global business, market, Asia, culture, trends, etc.Please note: Leverage Shares is an ETP provider that offers daily-rebalanced products in leveraged/unleveraged/inverse/inverse leveraged factors. The company holds both long and short positions in a number of stocks (some of which might get a mention in some articles) in order to construct its products. Please consider risk factors carefully before investing in them.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

I lead research at an ETP issuer that offers daily-rebalanced products in leveraged/unleveraged/inverse/inverse leveraged factors with various stocks, including some mentioned in this article, underlying them. As an issuer, we don't care how the market moves; our AUM is mostly driven by investor interest in our products.

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Comments (104)

China’s regulator soothes nervous markets over Chinese stocks’ delisting woes after global sell-off
Chinese regulators are ‘open’ and ‘respect’ where Chinese companies seek to list, the China Securities Regulatory Commission said in a statement
Reports that regulators are pushing for so-called variable interest entities (VIE) to drop their listings in the United States are a ‘complete misreading and misinterpretation’
Yujie Xue
Yujie Xue in Shenzhen
Published: 10:00pm, 5 Dec, 2021
That is BS. Nio is not being delisted at all. No bank or wealth manager would give a buy or neutral call on the stock if it is being delisted. It will not now nor ever be delisted! Please stop taliking about BS rumors that are never going to be true!
More info, this time from Chinese regulators:
Latest news from China regarding progress with US SEC:
Chinese securities regulator says it recently had constructive communication with US SEC, PCAOB...
In terms of US-China audit and regulatory cooperation, the CSRC has recently had frank and constructive communication with the SEC, the Public Company Accounting Oversight Board (PCAOB) and other regulators on resolving issues in cooperation, and has made positive progress in advancing cooperation on some key matters, the statement said....

NIO will survive all this political and short attacks from Wall Street ! The company is about to disclose NIO day and show the world how a first class company deals with market adversities . Proud bag 💼 holder of NIO 💰💰💰
amootpoint profile picture
Some excellent and very informative comments below.

It just truly hurts that I did enough due dilligence on the company and overlooked the macro-political scenario and I find myself in 15% loss in NIO with 10% of my portfolio. This truly sucks !
@amootpoint Look at this action. Lk (LKNCY ) now is delisted from NASDQ because they were inflating the bottom line, I bought the stock at $1.59 and used money that I could afford to loose ! LKNCY delisted, started trading on OTC MARKETS ! I find my self as a 💼 holder with 💼💼💼 full 💰💰💰Now Lk will be trying to go back to NASDQ! So deleting is not the end of the world unless you sell! Have a good day $
@amootpoint Given that everything is down that is not a problem at all. You can still sell it and buy something else with minimal loss.
The big question for investors in Chinese stocks listed on U.S. exchanges is, what will eventually happen to these stocks if they do get delisted. IMO the fear is far greater than reality.
@Pisang OTC... Just like Tencent. No need to worry.
China needs to liberalize in order to become very successful in the new century.
Pooh Bear and the ridiculous Mao garbage is the road to disaster.

VIEs will be made illegal before long.
I didn't catch the China Mobile delisting in time, but it worked out just fine. I kept getting dividends for about a year and then they cashed me out in October and I came out slightly on top. With NIO I loaded up at $2.70 and again $1.22 back in 2019 and sold a small portion earlier in the year at $45, so I'll just let this thing ride out and see how it plays. I have eased back quite a bit though on directly buying ADRs, and I'm buying China ETFs instead to keep some exposure to the Chinese market.
Both USA and China dont want to delist chinese stocks which can not raise seven times more money in hk exchange. If the communist party did not care about the global investors, It is good that we can see inside revolution very soon. Chinese billionaires will organize the revolution soon.
@RAVICHANDRAN Chinese billionaires aren't going to do jack s%^& after Jack Ma paid for his early attempt to embarrass the CCP into changing its ways. They are billionaires because of the system currently in place, if any of them step out of line they are taken out back and re-educated or tried for corruption and executed.

I agree neither US nor China has any appetite to delist any more stock from Nasdaq, for different reason though. The DIDI delisting is a result of management blunder who disregard Chinese regulator's warning. I don't think anyone did this kind of blunder before DIDI. I don't think anyone would do this kind of blunder after DIDI. As long as everybody stay within the line, Chinese regulator won't be asking for more delisting.

Today's market reaction will serve a reminder for SEC if they ever apply the delisting rule on Chinese company in future. Billions have been wiped out today.
I hope NIO will delist in the US and list in HK so we can exchange our ADRs for shares in HK and don't have to read these paid-for-trashing articles anymore.
@JohnnyXY exactly because that’s what will happened either pinksheet which I have no problem because they’re are many pinksheet billion dollar companies (Samsung, Volvo, etc) or HK listing.
In the worse case scenario, what would happen to option holders of nio if delisting happens from US exchanges?
Elon the GOAT profile picture
@SAalwayslies same question. I wonder if NIO will buy back shares at a 10% 20% premium to where it is trading currently.
@Awjeanbeau probably not. They need cash for expansion. I'd rather expect more share offerings.
Look out below!
necto profile picture
long NIO
Djreef1966 profile picture
The fastest way to (EMAD) economically mutually assured destruction for both economies is to start kicking each other’s stocks off of the respective exchanges, or whereby home countries start pulling companies off of foreign exchanges in a perpetual tit for tat. A potential cascade of uncertainty could result crashing all markets. Neither side wants this.

@Djreef1966 but for the fact that under CCP pressure, DIDI is delisting.
@Djreef1966 It is the US who started the ball rolling
Djreef1966 profile picture
@SavvyOrBroke Because DiDi never got permission from the regulators to list on the exchange in the first place. The SEC would have done the same for any US company.
Big boys playing games
amootpoint profile picture
@gramee Goldman got the whiff of hawkish tone of jay pow, 4 days in advance. Just so unfair.
@amootpoint They been hinting at this for months, though.
amootpoint profile picture
@MarketMaker58 No, but it was not the same jay pow after re-election. He changed to sever hawk within just 2 weeks of re-appointment. Nothing has happened in the market to put everything in such panic mode. Especially when there is omnicron on the horizon. Yes inflation has persisted a bit longer. But for that they should try to resolve the supply chain issue rather than raise interest rate for everyone. There is sure shot politics behind this.

If Jay pow is hawkish, biden can get his BBB plan passed.
Biden wanted market to feel the pain so that it asks for more stimulus. Basically Jay pow printer had to stop in order for biden to start printing through its BBB.
For all you young turks keep buying from Communist China and keep talking about social justice in this country when China doesn’t have it they use slave labor
@W. Denney Oh but we have it? We, the USA, the most war-obsessed, murdering, illegal coup, county-destabilizing, foreign-resource-stealing, terrorist or "moderate-rebel" funding/arming/training, economic warfare/sabatoge (ie. sanctions) obsessed country in the world for the past 70+ years? Wake up.
@burtilp Looks like you had CRT in school if you don’t like America you can always move to China
@W. Denney Last time I checked... this is an investment website. Not a racist political forum.
Newbie.75Mil profile picture
Can’t get through all the knee jerk market chatter coming from readers like you and me, as well as analysts. The best advice is to understand the fundamentals of the business, pay attention to company guidance and be a disciplined investor. If you don’t mind high a valuation for disruptive technology, then stick to your guns.
Reading is never enough profile picture
These are rumors that want to make you panic .
Best stock ever.
Nio is in formoula E
And makes soooo many amazing products.
Before you buy a stock read and then own it.
Amazing stock.
Don’t let the shorters panic you.
Make money.
@Reading is never enough Prudent advice, albeit about 20 months too late. We all know it's all about timing. Nio is no exception
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