Electric-vehicle maker Nio slid as much as 6.8% on Wednesday after it announced plans to sell up to $2 billion in US-based shares, the biggest such offering since Didi’s IPO.
NYSE-listed shares in Nio fell as low as $37.81 on Wednesday from the previous day’s close of $40.59.
Shanghai-based Nio had previously signaled it would pursue a second listing in Hong Kong, following the lead of rivals like XPeng, which did so in June.
Analysts cited by Bloomberg disagreed on whether the $2 billion in US shares indicated further hurdles in the Hong Kong listing process. Deutsche Bank’s Edison Yu said delays in Hong Kong might’ve spurred the company to turn to American markets. But Bloomberg Intelligence’s Steve Man differed, saying the most likely rationale is curbing the company’s debt costs.
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Workhorse, the Loveland, Ohio-based electric-vehicle maker, has become a retail favorite among other auto manufacturers, like Lordstown Motors and Canoo.
Shares of the plane-maker have rallied more than 12% so far this year.
Shares of Nio rose 4% on Tuesday after Citi upgraded the Chinese car maker to “buy” from “neutral,” citing a surge in demand for electric vehicles in China.
Citi lifted its 2021 sales estimate for electric vehicles in the country to an estimated 2.52 million units from 1.79 million units. For 2025, the firm also boosted sales estimates to 7.84 million units from 6.86 million units.
Citi said it expects that the uptick in the second quarter order backlogs will increase Nio’s revenue and market share in the second half of 2021.
Citi’s new price target of $58.30, raised from $57.60, represents a potential 50% upside from Friday’s closing price of $38.62. The bullish new target comes despite a rough year so far in 2021 for the electric vehicle maker, and the industry broadly, as supply chain and manufacturing constraints weigh on car makers’ delivery guidance.
“Based on the current production and delivery plan, the company will be able to accelerate the delivery in June to make up for the delays from May,” Nio said in a statement Tuesday. “The company maintains and reiterates the delivery guidance of 21,000 to 22,000 vehicles in the second quarter of 2021.”
Nio shares ended with a more than 5% rise on Monday after the electric vehicle maker struck new agreements with two manufacturers in China, one of which will nearly double Nio’s production capacity.
The company, which is Tesla’s biggest competitor in China, said it renewed manufacturing contracts with Jianghuai Automobile Group Co., or JAC, and Jianglai Advanced Manufacturing Technology, or Jianglai. Financial terms of the deals were not disclosed in Nio’s statement.
State-owned JAC will make vehicles for Nio in the city of Heifei for another three years, until 2024, and will expand its annual production capacity to 240,000 units. Nio said the expansion will help it meet the growing demand for its cars. Earlier this year, Nio said was aiming to reach 150,000 units in annual production under one shift.
Shares of Nio rose as much as 7.1% to $36.49 during Monday’s session before closing it up by 5.4% at $35.89.The shares in January hit an all-time high of near $67 but over the course of the year have dropped about 26%, hurt by persistent selloffs in growth stocks as the prospect of surging inflation rattled investors. But over the past 12 months, the value of Nio’s value has surged by more than 1000% from close to $4.
Nio said Jianglai will be responsible for parts assembly and operation management. Jianglai is a joint venture between JAC and NIO where Nio holds a 49% equity stake.
Tesla launched its first model, the Roadster, back when there were virtually no electric cars on the market.
Now, as the electric-vehicle space is bursting more than a decade later, one manufacturing expert thinks Elon Musk’s automaker still has no true rivals.
“None. There are no competitors to Tesla. But when they do come they’ll be Chinese,” Sandy Munro said during a Q-and-A session on his YouTube channel when asked which companies pose the biggest threat to Tesla. Munro runs an engineering firm and is well-known for his cost-analysis teardowns of cars.
Tesla is far and away the dominant force in the EV industry currently, and its roughly $40,000 Model 3 sedan was the best-selling electric car in the world in 2020. But legacy automakers have their sights set on the startup’s crown amid tightening emissions regulations worldwide and growing excitement from investors around EVs.
Volkswagen announced an all-out electric offensive this year that includes several European battery plants and major investments in charging stations. Ford recently began selling its first EV, the Mustang Mach-E crossover, which has already begun eating into Tesla’s US market share, according to analysts at Morgan Stanley.
According to Munro, who has been involved in EV engineering since the ill-fated GM EV1 of the late 1990s, the Mach-E is the “closest thing to an electric car that could – could – take on Tesla.” But Chinese carmakers like Nio, XPeng, BJEV, and Geely will pose the biggest threat to Tesla and traditional OEMs alike as they bring electric cars to market in the coming years.
“Quite frankly, apart from Tesla and Rivian and maybe a few others here, all the other OEMs better pay attention. Because the Chinese EVs have builds as good as anything we’ve got here [and] costs that are significantly lower,” Munro said. “You better have your belt on real tight when the Chinese start putting their cars into North America.”
Munro has said that Tesla is 10 years ahead of the competition when it comes to some elements of its manufacturing. Some Wall Street analysts think Tesla’s lead in the EV space will extend for years.
In a March note, analysts from UBS said Tesla will remain the most profitable electric-car company through at least 2025, even though Volkswagen will overtake it in terms of EV sales by that year.
Nio initially fell as much as 4% in Friday trades after its first-quarter earnings beat was overshadowed by the potential slowdown in car production due to a lack of semiconductor supply. But those losses were ultimately reversed, with investors brushing aside chip supply concerns and bidding shares of Nio higher by as much as 6%.
“The overall demand for our products continues to be quite strong, but the supply chain is still facing significant challenges due to the semiconductor shortage,” Nio CEO William Li said.
First-quarter revenue for Nio hit a record $1.2 billion, handily beating analyst estimates by $160 million and representing year-over-year growth of 481% as demand for electric vehicles in China soars. The company delivered 20,060 vehicles in the quarter, representing a 423% increase year-over-year and a sequential increase of 16%.
The China-based EV manufacturer expects to deliver 21,000-22,000 vehicles in the second quarter, representing year-over-year growth of more than 100%.
Green stocks have sold off quite aggressively this month, but fears of a bubble are overblown and a new climate focus from Joe Biden and other governments means environmental investing is only just getting going, JPMorgan’s co-heads of ESG research for Europe have said.
Jean-Xavier Hecker and Hugo Dubourg told Insider the Biden-Harris green stimulus plans, China’s sustainability push and Europe’s new environmental investing rules would all boost the market and create new opportunities.
The recent stock-market volatility – triggered by rising bond yields – has hit green stocks, such as those in renewable energy and electric vehicles, along with tech, after these sectors last year.
The iShares clean energy exchange-traded fund was down 12% in the month to Friday according to Bloomberg data, for example, while the S&P sustainability index has underperformed the wider market. Electric vehicle stocks such as Tesla and Nio have fallen sharply too. The S&P 500, meanwhile, has gained over 3% so far in March.
But Dubourg said: “The stocks that have tumbled are largely solar and EVs, where the valuations exploded at the end of last year. So it’s not really ESG investing overall which has been questioned.”
He said the market is “not being nuanced enough” in its approach to environmental, social and governance investing.
Hecker said investors had focused on the “simplistic trade” in recent months, bidding up green favorites. Tesla is a prime example, rising more than 500% over the last year, but falling around 7% in the month to Friday. Yet the market should “not be too concerned about green bubbles,” he said.
“The climate ambitions of the Green Deal in Europe, of the Biden-Harris platform in the US, of China with its 2060 carbon-neutrality ambition will be much more transformative,” he said. The Biden administration’s advisors are hoping to spend around $3 trillion, with climate change a key focus.
Hecker added that the Biden administration is likely to boost green investing as it tries to match Europe’s advancements on ESG rules. “There is no way the US is going to let Europe be the standard setter on ESG,” he said.
Europe introduced new reporting rules for companies earlier in March that aim to help investors work out which assets really are green. It is part of a wider push by the European Union to set standards for climate-conscious investing.
Green investing had a bumper year in 2020, despite the coronavirus crisis. Goldman Sachs analysts said in a note ESG equity and fixed income funds attracted record inflows in Europe and the US last year, at 184 billion euros ($216 billion) and $50 billion, respectively.
Yet there are growing concerns that the craze for green investing is not as climate-friendly as it makes out. A report from a group of global campaign organizations on Wednesday that the world’s biggest banks, including JPMorgan, have invested $3.8 trillion in fossil fuel firms since the Paris climate agreement was signed in 2016.
A separate report released on Monday by the Climate Action 100+ investor group, which collectively managed $54 trillion, found companies were so far badly failing to live up to their climate pledges.
Mindy Lubber, Ceres CEO and Climate Action 100+ committee member said there is an “urgent need for greater corporate action and higher ambition.”
Hecker and Dubourg – who work independently of JPMorgan’s banking operations – said that although some companies could do more, it will take a while for the effects of commitments to be seen. They said Europe’s new rules were a positive step in this regard, as they provide clear benchmarks for firms to be measured against.
As governments increasingly focus on climate change, new opportunities will crop up in sustainable investing, they said. For example, the Biden administration’s climate plans are likely to extend, or increase tax credits for renewables and support carbon-capture technology.
Hecker said carbon capture is “something which at some point is going to take off because it will be needed as part of the mix… to deliver on the Paris agreement goals.”
The JPMorgan ESG research chiefs said tackling climate change would require even major polluters to change their ways and become much more environmentally friendly.
“There will be no such thing as these stocks increasing by 4,000% again,” Hecker said. “Now you need to be looking for relative winners and differentiated business models.”
Retail investors could buy a record $3 billion of US equities in a single day when they receive their $1,400 stimulus checks from the US government, according to Viraj Patel, global macro strategist at Vanda Research
Numerous Americans have already said on social media sites they’ve already received the cash approved by Congress and signed off on last week by President Joe Biden. The aim is to help reinvigorate the world’s largest economy after it was thrown into recession last year because of the coronavirus crisis.
A new round of cash coming into equities would take place at a time that the S&P 500 Index and the Dow Jones industrial average have hit all-time highs, spurred in part by investors rotating into cyclical stocks that should benefit from the recovery in the US economy. Many businesses have been reopening their doors as millions of Americans have received vaccinations to ward off COVID-19 infections.
“But besides just guessing past retail favourites (GME, TSLA, AMC, BB, NIO etc.) in the hope that retail traders will plow their stimulus checks into those stocks once again — we’d think owning small-cap indices (namely the Russell 2000) could be a good way to position for this week’s event,” Patel told Insider via email on Monday.
Vanda Research’s data analysis arm VandaTracks tracks retail investing activity in 9,000 individual stocks and ETFs in the US.
GameStop, AMC Entertainment and BlackBerry have become popular among retail investors who are active on Reddit’s WallStreetBets platform and who drove the January rally in those and other so-called meme stocks.
Big buying of US equities on Wednesday would be on the same day the Federal Reserve will release its monetary policy statement. The Fed isn’t expected to make any changes on interest rates but investors will listen for indications from Fed Chairman Jerome Powell about when the central bank will begin to raise interest rates in the face of improvement in the economy.
Nio stock slid as much as 18% on Tuesday, extending the electric-vehicle maker’s two-day skid to 24%. The company has been swept up in a broader industry sell-off led by larger rival Tesla.
Shares of both company are being pulled back alongside other technology stocks as investors evaluate rising borrowing costs in the face of rising bond yields. Bond yields have stepped higher as investors price in a potential pickup in inflation on the back of economic recovery from the COVID-19 pandemic.
“Given their aggressive discounting to present of long-term cash flows, they’re suffering from the same effects as investment grade corporate bonds and anything else that pushes cash flow far into the future,” Bespoke Investment Group said of tech stocks in a Monday note.
For evidence, the firm highlighted the Nasdaq 100‘s more than 4% underperformance versus the Russell 2000 index of small-cap stocks over the past two days.
Tesla shares fell 5% as much as 9% on Tuesday following a similarly-sized drop the prior day. The stock has been under pressure since the company stopped orders for the lowest-priced version of its Model Y SUV over the weekend.
Prior to the two-day dip, Nio’s stock price had been climbing in recent months on growing interest among investors in electric vehicles and green-energy products, factors that have also contributed to the surge in shares of EV maker Tesla.
Churchill Capital Corp IV is operated by veteran Wall Street dealmaker Michael Klein, and is the fourth of seven ‘blank-check’ companies which Klein has been using to take partner companies public.
In this case, the partner firm is Lucid Motors, a relatively well-established EV manufacturer based out of Newark, California, and which targets the luxury end of the car market. The deal could potentially value Lucid at $15 billion, according to Bloomberg.
Starting at $77,400 ,the Air features a 9.9 second quarter-mile and fast-charging that captures 300 miles of new EV range in just 20 minutes.
Shares of Churchill Capital Corp IV are trading close to $15 after hovering around the $10 mark for months. The SPAC was the third most traded name among Fidelity customers as of Tuesday morning, behind EV makers Nio and Tesla, according to data from Fidelity.