Benzinga
NIO prepares to report Q4 earnings as shares of recent highs retreat
In the electric vehicle industry (EV), profitability has regularly exceeded future expectations. When China-based electric vehicle maker NIO Inc. (NYSE: NIO) goes head-to-head next week, investors are likely to be more interested in its vehicle revenue and delivery prospects than in how much the company lost during the quarter – of course a big fog or big surprise. Earlier this year, NIO said it delivered a record 17,353 vehicles in the fourth quarter. Although small compared to the 180,570 deliveries of Tesla Inc (NASDAQ: TSLA) during the quarter, the NIO number represents an increase of 111% year-on-year and has the upturn of its lead from 16,500 to 17,000 vehicles beaten for the quarter. Speculative and fundamental drivers While increasing deliveries are encouraging for NIO bulls, the company was in the red. In other trades, you can expect a modest share price action for a money loss business with a negative backlog and price-to-earnings ratio. Not so for NIO. The stock’s gains accelerated last year and early in the year, reaching a record high of around $ 67 in January. The stock started at around $ 4 in 2020 (see Figure 1). FIGURE 1: HIGH VOLTAGE. On a percentage basis, the shares of Chinese electric vehicle manufacturer NIO (NIO Chandelier) Tesla (TSLA – purple line) have given money over the past year. However, both NIO and TSLA have lost some of their juice over the past few days. Data Sources: Nasdaq, NYSE. Graph source: the thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results. Part of the astonishing profit was probably due to the general market dynamics amid low interest rates, accommodating central banks, actual and expected stimulation of the coronavirus and the anticipation of recovery after vaccination. There may also be an element of investors chasing momentum in a hot stock. The $ 1 billion financing of Chinese state-owned enterprises also helped. It can also be disputed that there may be more fundamental tailwinds that will help NIO’s stock in 2020 on the accelerator. Demand for EVs increases as battery life increases, costs fall, more charging stations are built and environmental issues continue to work. public consciousness. But in the EV space, investors’ optimism about the potential of manufacturers may make companies look bigger. Call it the Tesla effect, because investor optimism has helped make the company the most valuable carmaker in the world through market capitalization. Like the vehicles it manufactures, NIO shares cannot accelerate forever. After gaining shares in January, the stock retreated sharply. Some of it can be profitable and cooler heads prevail before the release of the earnings. There may also be warning about the tariff relationship between the United States and China, the two largest economies in the world. NIO Earnings and Options Activity When NIO announces its earnings after the end of Monday, March 1, it is expected to report a loss of $ 0.07 per share, according to estimates from third-party consensus analysts. Revenue is estimated at $ 1.01 billion, up 148% from a year ago. Note: Consensus may need to come up with an asterisk, as only a handful of analysts cover the company. The options market released an expected share price movement of approximately 11.5% in any direction around earnings. Implied volatility is on the 25th percentile from Friday morning. Looking at the expiration of March 5 options, put activity was highest at the 35 and 40 strikes. But more activity was seen upside down, especially in the 50s and 60s strike. Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price over a specified period. Investors’ plug-in In addition to the earnings data, investors may seek new guidance from the company next week. Top of the list: they’ll probably be listening to an update on NIO’s battery technology. Batteries are key for the EV market, as more efficient batteries that can store more power mean vehicles can go longer without charging, giving drivers more peace of mind. In January, NIO introduced its first sedan, called the ET7, which boasts driving ranges of more than 500, 700 or 1000 kilometers, depending on the battery. Investors will probably want to hear about how the pre-orders for the vehicle are progressing, the delivery of which is expected to start next year. Investors are also likely to keep an eye on the competition. The EV market field has become busier, with new interest from not only automotive companies and EV startups, as well as from major technology players such as Apple Inc (NASDAQ: AAPL) and Amazon.com, Inc. (NASDAQ: AMZN). Space for everyone? Despite the ever full field, the pie is quite large (and it’s going to get bigger). Though NIO has never ventured outside of China, the world’s largest EV market is a fairly large playground. Technology market analyst firm Canalys predicted in a recent report that 1.9 million electric vehicles will be sold in China this year, compared to a record 1.3 million in 2020. As a Canalys CEO put it in comments with the report: ‘With a share of just 6.3% of all passenger vehicles sold in China in 2020, many years of growth. “TD Ameritrade® comments for educational purposes only. SIPC member. Options pose risks and are not suitable for all investors. Read the features and risks of standardized options. Photo by Vlad Tchompalov on Unsplash See more of Benzinga Click here for options trading from BenzingaTesla, Apple has been bumped since the end of January, but energy, finances showing LifeYield sign: flash in ten years treasury above 1.5% ghost market in Thursday Selloff .com.