The stock price plummeted after being short-selling. Are new car-building forces a real skill or a fake bubble?
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NIO's current valuation is twice that of Tesla.
While the new car-building forces were advancing all the way, "Big Brother" Wei Lai was short-selling, driving the share price of Xiaopeng and Ideal to plummet.
On November 13, Citron issued a short selling report stating that Weilai’s target price should be $25, which is only about half of Weilai’s current stock price. Affected by the Citron short-selling report, Weilai plunged 7.74% that day, which also drove Xiaopeng down 6.13%, ideally down 1.83%.
Citron said that two years ago, when Weilai's stock price was only at $7, he recommended everyone to buy Weilai stock. At that time, Citron was mainly attracted by the personal charm of Weilai CEO Li Bin. Today, whether it is from the perspective of NIO's position in the Chinese electric vehicle market or the short-term development prospects, NIO's current stock price is unreasonable.
Strong competitor: Tesla
Citron gave two reasons. The first is the competitive relationship between Tesla Model Y and NIO. Citron cited Deutsche Bank’s point of view that Tesla may reduce the price of the domestic Model Y from 488,000 yuan to 300,000 yuan. It will be a direct competitor of Weilai EC6 and ES6, which may harm market sentiment. And slow down the momentum of Weilai's order growth.
Second, Citron believes that Weilai's current valuation is too high. Weilai's current valuation is twice that of Tesla, and its premium to Tesla has reached the highest level in history. At the same time, Weilai also faces more intense competition than Tesla.
When Tesla as like Wei to deliver 5000 vehicles, Tesla US electric vehicle market share of 45%, while Wei to now in the country's new energy share of the car market was 3%. Citron believes that " Nio investors now seem to prefer'gambling'" and suggested that it is time for investors to clear out NIO and find the next disruptive technology.
Fancy China's market potential
China’s new car-making forces have undoubtedly been the target of the capital market before, and the market value of Weilai has surpassed traditional automakers such as GM, Ford, and BMW successively within this year.
The capital market values the value that new car-building forces may create in the Chinese market in the future, but it also seems to require some rationality. BYD has also skyrocketed by 355% this year, but its market-to-sales ratio is only 3 times, while the current market-sales ratio of Weilai has reached 17 times.
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