Is Nio $3 Stock A Buy Now? Tesla Of China?

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The company that people were calling the Tesla of China has fallen so bad. Nik stock went IPO for $11 a share not that long ago and now it is a $3 stock. The question is can this company become the tesla of China over time and is it worth a buy down here at $3?

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Well good day subscribers and welcome in hope you guys are all doing great out there today we’re gonna talk about Neo stock we got a comment yesterday on a video in regards to Neo stock someone wanted to know about Neo stock and quite a few likes and this is a stock we probably haven’t talked you know super in depth on in quite some time.

This is a stock that’s now in the $3 range I believe that last time we talked super in depth about Neo stock was when they went IPO I did a video did it went IPO about is Neo stock a scam the Tesla of China and man I got a lot of hate on that video, a lot of people did not like what I had to say in regards to Neo stock I was obviously very negative on that stock at that particular time.

And since that time, Neo stock has been an absolute disaster. It was like $11 when I did that video, and here today it’s about a $3.61 cent stock and keep in mind it’s only been like I don’t know eight months or nine months or so since Neil went public so it hasn’t been that much time and the stocks down like 70 plus percent in a very short amount of time.

Okay, so the stocks been a disaster. But the question is, is a stock worth buying now so I want to kind of give like an updated look at Neo when they went public this company almost had no revenues almost no, their business was almost just like an idea of a business whereas now this company actually has deliveries of vehicles actually doing some pretty decent numbers.

So I want to go ahead and take a look at those so hope you guys enjoy this video. Make sure you hit that thumbs up button. So let’s start getting into this guys. Now first off, Neo just reported earnings like literally yesterday. Okay, so Neo had adjusted per share loss of 36 cents, but that was better than the 47 cent loss. They were expected.

Okay, so they did better as far as but they still lost money. And then they revenue came in at 243 million, which was also higher than expected. So this company is doing decent revenue volumes now 243 this past quarter like that’s pretty decent.

Now keep in mind like literally this time last year, company pretty much had no revenue, so it’s a big change for the company. Their management said he s eight deliveries total just under 4000 had exceeded the company’s expectations, even in the face of electric vehicle subsidy reductions.

Slowing macro economic conditions, increased competition and several factors related to the Chinese New Year holiday over it pointed to a challenging environment going forward. So this company they haven’t ramped like in a massive way obviously they totaled you know, just under 4000 vehicles they delivered in that quarter.

So just over 1000 vehicles a quarter are excuse me 1000 vehicles a month, obviously they’re getting out there, you know, 1000, maybe 2000 they can get up to so the company still in very very small scale, they haven’t ramped in any major way as of right now but the numbers are progressing Okay, as far as their.

Commentary they said looking ahead to the second quarter we expect an even more challenging sales environment and anticipate overall sequential demand and deliveries to decrease that means quarter over quarter there as competition continues to accelerate in the general automobile market in.

China remains muted the CFO said Against this backdrop Neil is focused on rolling out our es six nationwide at the same time improving overall network utilization and operating efficiencies now if you don’t know the like the vehicles This company has in the market they only really have one vehicle in the market as of right now and there’s an E s eight which is an SUV.

I should be showing you here here’s another picture of it is an interior and it’s a pretty decent looking vehicle in my personal opinion inside and out and these vehicles are very competitively priced so they’re not like you know super high end they’re they’re more expensive than probably the average car but it’s not like they’re they’re super high priced or something like that.

It’s like it’s it’s affordable for some of the you know, maybe let’s say the top 10 to 15% of Chinese citizens not like the top one to 2% for instance okay and then they’re also coming out with the s6 which is another all electric SUV but it’s a looks a little smaller roofline looks a little smaller but it does look.

Pretty similar honestly to the E s eight so we’ll have to see you know how those shakeout and how those do in the market and you know, just one steel sales from the other things like that. Okay, so those are the that’s the product they have in the market right now the ESA s six is coming so they they’re starting to ramp in some way But once again, go via you know, a car maker that’s not making a lot of cars.

As of right now, right? Now, here’s the really good thing about this for Neo right passenger vehicle sales in China this past year were 23 24 million that’s pretty much where they’re at consistently. Needless to say, the Chinese automobile market is a massive one, okay, much bigger than anywhere else in the world.

You know, 23 24 million vehicles sold this past year, like those are incredible, incredible numbers. So meaning, you know, a company like Neo that’s super nice. That just delivered 4000 vehicles in the last quarter. So a little over 1000 vehicles a month they’re doing like imagine what they could potentially do someday down the road.

Imagine if they just got a 1% market share of the Chinese automobile market. I mean, imagine how big the company It would be or imagine if they got to 2% or 5%. Like, you know, it’d be incredible, right? Because the market is just so massive in China right now that’s a positive, there are a few negatives.

Obviously, the US China trade war is heating up in much more of a substantial way that’s starting to get worse rather than better. So obviously, that is something that could potentially hurt the Chinese economy even more meaning less and less people buying new cars, and that hurts new car sales in the end. But in my personal opinion, since Neil is so niche, even if the economy slows in China, it really doesn’t matter.

Let’s say the Chinese economy slows quite a bit more. And let’s say, you know, there’s only 20 million passenger vehicles sold in China next year. With your Neil, what does it really matter if 20 million or 25 million, the market is so big, and you’re so niche, it matters much more, if you’re one of those automobile manufacturers that’s making millions a year right now.

And those numbers get a lot weaker. But when you’re just the little guy coming into the big market, like like, you know, the growth is ahead of you like does, it doesn’t matter what’s going on the economy, as long as you’re producing a product that everybody wants, and you’re super niche, like you can grab tons and tons of market share over time, okay.

Now, the other bad thing for this company is the Tesla Giga factory in Shanghai, it’s being built at a very, very rapid pace in that one should open at some point in 2019. Probably the fall time, maybe we could be looking anywhere from October opening, maybe a December opening, I’m probably showing you another, you know, view of it here.

This is from Jason Yang’s YouTube channel here, he does a lot of great drone videos on the construction how fast that is going. So needless to say, like, like Tesla is going to finally be a big competitor in the Chinese market. As of right now Tesla has been is super, super nice, obviously.

Because the mere fact that the there’s so many import duties, and obviously shipping the cars from Fremont, California to China, there’s so much that goes into it that makes a Tesla extremely, extremely expensive in China, like our test is already a pretty expensive vehicle when it comes to Model S and Model X, right?

Even if you live in the States. Now imagine if you live in China, how much more like those vehicles can be anywhere between 20% and 40% more expensive in China than somebody in the states is buying it. And keep in mind, obviously, you know, the amount of money made for an average Chinese citizen has no work, you know, comparable to a US citizen.

So needless to say it’s you know, the the competitive environment is going to get a lot more even for tests over and China. So we’ll have to see how that plays out. It’s obviously a negative for Neo because maybe Tesla could take some sales away from China.

I’m not so convinced that Chinese citizens, even with this trade war going on are going to you know, say we don’t want to buy a tussle because American, you know, car manufacturer out there, I think actually the Chinese citizens are very supportive of Ilan musk in what Tesla’s doing there.

So they’ll be interesting to see how it all shakes out. But once again, Neo is so nice, that doesn’t even matter really much for them. You know, if Tesla comes into the market right? Now, Neil, once again, we talked about this stock, it’s a $3 stock now $3.61 to be exact, so even my one year old and four year old could afford to buy these chairs, again, market cap on this company is $3.7 billion at this point in time.

So a teeny, teeny tiny market cap, especially from where this company went public, which they went public, I think it was like 11 or $12 billion market cap maybe even up to 14 billion at some point. So it was obviously you know, a much bigger market cap company at that time.

Now you get into buy for under 4 billion that’s that’s, you know, much more realistic for where this company is at at this particular time. Now, the hope is they can grow into like a Tesla over time. Obviously, Tesla even after Tesla’s massive drop it’s had this year, which Tesla stock in 2019 has been an absolute disaster, right?

Even with the disaster, that has been Tesla’s stock price. This year, the market cap on Tesla still around 33 34 billion. So imagine if Neo could grow into like, just where Tesla’s that today, you know, something that’s like a 30,000,000,030 5 billion market cap, okay.

Imagine that nevermind where Tesla goes in the future, if Neo could just get to the stage where Tesla’s that today, obviously, you can make like a 10x on your money or 9x on your money or something like that, that would be insane, right. And that’s kind of what you have to be like going for if you’re investing in Neil stock.

Because obviously there’s a big risk in the stock the fact that they lose money consistently, they’re probably continue to lose money for quite a while in the future. And the fact that they’re just starting to, you know, try to ramp for the first time right now, sometimes betting on the small dog pays off, and sometimes it doesn’t Snapchat, for instance, the stock goes public $24.20 17.

So it’s been public for I don’t know, a couple years now. And today, the stocks $11 stock, so it’s down 50 plus percent since basically low, you know, the day when IPO and that’s after still two years. So you’re still you know, you could be waiting a long time to even break even on.

Snapchat, you know, if you ever breakeven on Snapchat, so that’s obviously an example of betting on the small company that obviously hasn’t worked out doesn’t mean it won’t work out the future, but they’re so far from even like trying to break even if you bought that stock in the IPO at $24.

Okay, now another example of a company this was, you know, went public a long, long, long time ago. Okay, AMD has been a public company for a long time. But if you just look at AMD, this was a stock in 2016, early 2016, late 2015. It was a $2 stock.

Okay, so if you had pretty good insight on AMD, At that time, and you know, you thought it was pretty realistic, they could come back and make this into a successful company, obviously, you want massive amounts of money like that stock is like, you know, 14x, perfect 15x or whatever, since that time.

That’s unbelievable. So there’s certain times that if you bet on one of these small companies, you can absolutely knock it out of the ballpark, and turn $10,000 into $100,000 in a in a few years time or something like that. But sometimes it doesn’t work out. Okay. So there are kind of like three tiers.

I look at when I’m looking at a stock, and I’m thinking like, this is a speculative stock, okay? There’s what I call a spec stock is what I call a super spec stock. And then there’s what I call a straight gamble. speculative stock. Let’s start with that straight gamble. speculative stock.

That’s basically a dream of a company. Okay, so when Neil went public, it was basically like this idea of what we could create, you pay Neo like, almost had non existent revenues in the past and non existent deliveries of their vehicles. And they were taking massive losses.

So if you were buying Neo stock on the IPO, you were buying into a company that was a straight gamble, speculative stock, like a huge gamble, like basically like a Powerball ticket, you buy a Powerball ticket or Mega Millions ticket, right? You pretty much almost guaranteed to lose that money, right?

The $2 you put into that you’re almost guaranteed to lose. But it’s possible, like one in 300 million that you could hit and make a ton of money, right? That’s a straight gamble. speculative stock. Next one up is a super spec stock I call, which is a small company with no profits.

That’s where it would put Neo right now, right now, it’s a small company, they have no profits, they’re not expected to be profitable anytime soon. So if you’re investing in the stock, it’s a super speculative company. And the next tier up is a speculative company, which is, in my opinion, a big company with no profit. So like, always, you know, yeah, you guys know, my Tesla videos.

I’ve done a million of those in the past, I was called Tesla, for instance, a speculative company. It’s a really big company that’s doing some really big volumes now, but they still do lose money. And so therefore, they are a speculative company. Okay. So here’s how we kind of think about Neo.

Okay, so if you bought into the stock at IPO, you were doing basically a straight gamble speculative play, all right, once again, the stock went IPO somewhere around 11 $12 is $3. Today, Neo today, in my opinion, is a super spec play, once again, small company, no profits, there have been a few years.

this company has an actual legit chance of getting to that place where they’re actually a speculative company, meaning essentially, that this company is you know, a big company doing let’s say $10 billion in revenue, $15 billion $20 billion, but maybe they’re still losing money at that particular time.

Or maybe they just make a slight profits, which means this company’s as far as as market cap and valuation could grow substantially. So my personal opinion, if I look at Neo stock here, it has gotten a tremendous amount more interesting here today than any time in the past because they are starting to ramp and the valuation you have to pay for this company is substantially less.

However, there is a big risk with the stock in kind of, like, if you’re trying to buy into something that’s a spec stock, you know, depending on how speculative it is, is the less money you want to put in, obviously. So if you’re doing a straight gamble IPO, like that needs to be, you know, very, very small amount of money to do with something like.

Neo it still probably needs to be a small amount of money. And then if you’re doing something that’s just an overall spec company, which is a big company that takes losses and that can be a little bit bigger of an investment but still not like a one of your main investments or something like that.

So if I look at Neil stock, it is very interesting at these particular levels, that the chances of bankruptcy are possible. I’m not fully convinced that another big you know, Chinese tech company wouldn’t pull in and you know, loan the money or something like that, or maybe even the.

Chinese government backed them because they want Neo to succeed long term in the electric vehicle market. So you have many different factors at play much more interesting. Am I going to go by Neil stock tomorrow? Probably not. But I will say I’m a lot closer by Neil stock today than I was when that company went IPO and I was extremely, extremely negative.

So I’ve had a lot of change of heart around Neo in the recent months since it’s a $3 stock now with a $3.7 billion market cap instead of 11 or 12 billion like it was guys So anyways, I want to hear your opinion on your stock. Do you think it’s an interesting spec play? Do you think it’s still not there?

You want to buy the stock if it goes down to dollars would you not buy the stock no matter what I would love to hear from you guys in that comment section. As always make sure to smash that thumbs up button if you enjoyed today’s video with Thank you for watching and have a great day.

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