{"id":3823,"date":"2020-12-19T23:41:41","date_gmt":"2020-12-19T23:41:41","guid":{"rendered":"https:\/\/www.maxlee.info\/blog\/?p=3823"},"modified":"2020-12-20T23:54:29","modified_gmt":"2020-12-20T23:54:29","slug":"nio-not-tesla-is-the-better-ev-stock-pick-for-2021","status":"publish","type":"post","link":"https:\/\/www.maxlee.info\/blog\/invest\/nio-not-tesla-is-the-better-ev-stock-pick-for-2021\/","title":{"rendered":"Nio, not Tesla, is the better EV stock pick for 2021"},"content":{"rendered":"

Nio is the better way to profit from China\u2019s growing market for electric cars<\/strong><\/p>\n

Two of the most popular stocks on the planet right now are electric vehicle manufacturers Nio and Tesla. Together, they trade about 200 million share daily, thanks in large part to young individual investors hungry for a piece of the action.<\/p>\n

\"Nio's
Nio’s American depositary receipts have shot up even faster than Tesla’s shares this year, but Jeff Reeves thinks Nio’s the better stock to buy for 2021.<\/figcaption><\/figure>\n

<\/p>\n

But these stocks are decidedly not the same. Tesla TSLA, which went public at a mere $17 a share more than 10 years ago, has been through the Wall Street wringer, while Nio NIO made its debut in U.S. markets a little more than two years ago. <\/p>\n

Tesla is U.S.-based, with a cult-like following in American car culture and a quirky CEO, while Nio is a Shanghai-based EV company that doesn\u2019t have the same amount of fireworks around its brand.<\/p>\n

Both picks have a lot of long-term potential as they are core players in the long-term growth of the electric vehicle market. But if I had to pick just one to purchase at this price and hold for all of 2021, my money is on Nio over Tesla.<\/p>\n

Here\u2019s why:<\/p>\n

Nio\u2019s secondary offering was well-timed and appropriate<\/strong>: Some investors panned Nio\u2019s recent secondary offering<\/a> in December as a blatant money grab to capitalize on its skyrocketing share price.<\/p>\n

So what?<\/p>\n

Public markets fundamentally exist so companies can raise capital to keep growing, and the $2.6 billion<\/a> windfall for Nio was the right move at the right time. Nobody held a gun to anyone\u2019s head and demanded they pay $39 a share. That was a fair price \u2014 and in truth, more than 7% below market rate<\/a> at the time.<\/p>\n

If you hate secondary offerings, you hate Tesla too<\/strong>: While we are on the topic, does nobody remember a similar move from Tesla less than a year ago, where the firm raised $2 billion on shares priced at $767<\/a> (pre split)? Or a $2.7 billion<\/a> secondary offering and bond issuance in 2019? Or how about a September SEC filing that said Tesla will sell even more shares \u201cfrom time to time\u201d and \u201cat-the-market\u201d prices to keep raising cash? Followed by that $5 billion<\/a> it raised this month?<\/p>\n

If you think Nio\u2019s supposed share dilution is a death knell, it\u2019s time to review the headlines from Tesla.<\/p>\n

Battle of the EVs<\/strong><\/p>\n

\"NIO
NIO vs Tesla<\/figcaption><\/figure>\n

Tesla is not shorthand for EVs<\/strong>: As an analyst at Roth Capital Partners said in November, \u201cTesla is an umbrella stock\u201d that is tied to all other names in the sector.<\/p>\n

I don\u2019t dispute that, but I don\u2019t see it as a good thing. While it certainly has a more direct link to electric vehicle adoption than a legacy automaker like Ford Motor F that is still lagging way behind the pack, it is dangerous to think that more EV sales definitively means an ever-increasing market value for Tesla.<\/p>\n

Just at the tech bubble separated the powerhouses like Google GOOG from pretenders like theGlobe.com TGLO, , eventually markets will stop buying the trend and start looking at individual stocks. That could be dangerous for Tesla given its sky-high valuation.<\/p>\n

Tesla has a long way to go in China<\/strong>: Though much fanfare has been made about China-made Model 3 vehicles, Tesla only sold about 21,600<\/a> of the cars in November. That was good enough to be No. 3 in market share, but certainly not the game-changer \u2014 and less than one-third of the monthly run-rate necessary for forecasts of 880,000<\/a> China-made EVs by the end of next year.<\/p>\n

Where\u2019s Tesla\u2019s China explosion?<\/strong>: Total electric vehicle sales in China are living up to expectations, with November\u2019s tally surging more than 130% to 169,000 units<\/a>. While Tesla dominates the U.S. market, its 21,600 units sold in China is a very tiny sliver in a crowded field. What\u2019s more, the raw China growth rate for Tesla may be impressive at 45% more vehicles sold compared with the 15,000 vehicles<\/a> it sold in June, but it\u2019s really hard to get excited about a measly 6,000 more vehicles produced after six months when the stock is valued at more than $600 billion.<\/p>\n

Nio\u2019s growth is for real, from a smaller base<\/strong>: So far in 2020, Nio has admittedly only delivered 36,700 total vehicles<\/a>. But that\u2019s more than 110% more than 2019\u2019s tally \u2014 and it\u2019s aggressively investing to keep production ramping higher.<\/p>\n

While Tesla\u2019s China growth has to be digested as part of an established multinational company operating in the U.S. and Europe, Nio can capitalize on the China opportunity directly. If you recall the early days of Tesla, the EV manufacturer sold people on the promise that 30,000 deliveries could become 300,000 in just a few years \u2014 and Nio appears to be tracking that growth plan, too.<\/p>\n

Read: Global electric vehicle sales expected to grow 50% in 2021<\/a><\/p>\n

Nio has ties to state-owned allies: Recently, Nio signed a deal with State Grid Electric Vehicle Service Co, a part of China\u2019s massive state-owned utility. The plans are modest \u2014 to jointly build only about 100 charging and EV service stations in 2021 \u2014 but show that Nio is doing what all successful Chinese stocks must do, which is to win favor with state-owned allies to continue growing its business and squeezing out competitors.<\/p>\n

Meanwhile, Tesla\u2019s factory is 100% American owned \u2014 and while Chinese banks provided the $1.4 billion loan<\/a> for the facility, that\u2019s far different than a business partnership with partners in Beijing.<\/p>\n

Nio doesn\u2019t have Tesla\u2019s hype machine<\/strong>: There is no middle ground on Tesla. Right now, Goldman Sachs has a price target of $780 on the stock while JPMorgan Chase\u2019s is $90. Hedge-fund icon Jim Chanos put it aptly on Bloomberg TV<\/a> recently, saying Tesla is worth \u201cwhatever people want to believe Elon Musk is touting.\u201d<\/p>\n

Mark Hulbert: Why Tesla bulls are in the driver\u2019s seat as the stock nears inclusion in the S&P 500<\/a><\/p>\n

If you enjoy this kind of meta investing, trying to think about what other people are thinking about what Musk is thinking about, then focus on Tesla. But for many investors looking to cut through the noise and simply play the growth potential of China EVs, Nio is an option that sidesteps some (though admittedly not all) of the hysteria you\u2019ll frequently find around Tesla these days.<\/p>\n

Source: www.marketwatch.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Nio is the better way to profit from China\u2019s growing market for electric cars Two of the most popular stocks on the planet right now are electric vehicle manufacturers Nio and Tesla. Together, they trade about 200 million share daily, thanks in large part to young individual investors hungry for a piece of the action.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[],"class_list":["post-3823","post","type-post","status-publish","format-standard","hentry","category-invest"],"_links":{"self":[{"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/posts\/3823","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/comments?post=3823"}],"version-history":[{"count":0,"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/posts\/3823\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/media?parent=3823"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/categories?post=3823"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.maxlee.info\/blog\/wp-json\/wp\/v2\/tags?post=3823"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}