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XPeng reported just over 7,000 EV sales, up fractionally vs. March. Nio sales slumped to below 7,000 as is struggles with a model changeover. The major indexes had tumbled on Tuesday as First Republic Bank (FRC) revived banking fears.
The 10-year Treasury yield fell 12 basis points during the week to 3.45%. JPMorgan needed a regulatory waiver to buy First Republic, because it already controls at least 10% of U.S. deposits. PNC Financial (PNC) and Citizens Financial Group (CFG) also reportedly bid for First Republic. Dow Jones futures were little changed Monday morning, along with S&P 500 futures and Nasdaq futures. JPMorgan Chase (JPM) will acquire the bulk of First Republic Bank, as part of a quick government seizure and sale. The analyst also said JPMorgan hasn’t yet incorporated present value arising from Nio’s potential software monetization opportunity.
In the fourth quarter of last year, NIO fell 11 percent, XPeng rose 41.6 percent and Li Auto gained 22 percent. JPMorgan Chase also reduced its holdings in Li Auto by 13.5 percent in the fourth quarter, from about 2.3 million shares to 1.98 million shares. The bank did not hold any options or bonds on XPeng at the end of the third quarter, although it did hold 100,000 XPeng call options worth about $5 million at the end of the fourth quarter.
However, it has experienced a significant drop of 53.7% over the last year. “Morgan Money demonstrates innovation as a trading and risk management platform operating across currencies, offering operational efficiency and effective https://g-markets.net/helpful-articles/best-trading-indicator/ controls, securely and across time zones,” says Wang. Cash segmentation and adopting two different money market strategies (both subject to stringent credit quality frameworks) have positioned NIO to meet these needs.
The investment bank downgraded Nio’s rating from “neutral” to “underweight,” citing concerns about valuation, margin pressure, and increasing competition in the Chinese electric vehicle market. JPMorgan also lowered its price target on Nio’s American depositary receipts (ADRs) from $14 to $11, representing a potential downside of nearly 15% from the current price of around $12.80. Now we’ll turn to XPeng, another car maker working in China’s EV market. XPeng has several EV models in full production, including two sedans and two SUVs, with single-charge ranges from 520 to 700 kilometers. The company saw its delivery numbers take off in the first part of 2022; in August of this year, XPeng delivered 9,578 cars, for a 33% year-over-year increase. For the first 8 months of the year, the company’s deliveries totaled 90,085, nearly doubling from the same period last year.
What’s Behind the NIO Stock Downgrade
Analyst Nick Lai downgraded Nio’s stock from overweight to neutral and said it will become more and more challenging for the electric vehicle maker to deliver on its high expectations as time goes on. Due to a contraction in vehicle margins, according to him, the firm’s fourth-quarter results were a miss. Morgan’s Nick Lai “tactical” downgrade of the China-based electric vehicle maker, citing concerns that margins could deteriorate further the company will miss delivery goals. Investors likely cut exposure in the past week as many stocks erased gains or flashed sell signals.
Bitcoin price failed to break above a crucial hurdle on July 12, pulling back right when it was about to. The rejection has sent BTC back to its range-bound movement, signaling a common resolve among short-term holders to hodl instead of booking profits. The author makes no representations as to the accuracy, completeness, or suitability of this information. On the earnings conference call, NIO said it will enter the European market and has researched entering the US market according to Reuters. Worse, the First Trust Nasdaq-100 Equal Weighted Index ETF (QQEW) and Invesco S&P 500 Equal Weight ETF (RSP) tumbled below their 50-day lines on Tuesday. The latter also skidded below its 200-day as these ETFs kept falling Wednesday, even as Microsoft boosted the Nasdaq.
In addition, Lai believes NIO’s target for 2023 deliveries of 240,000 to 250,000 is “ambitious,” and he’s modeling for deliveries to be much lower, around 190,000. Note that cost basis is calculated and stored in thousands, so small quarterly changes in shares frequently
result in a cost basis of zero. FXStreet and the author do not provide personalized recommendations. The author makes no representations as to accuracy, completeness, or the suitability of this information.
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Despite the major indexes closing higher, there weren’t many opportunities to beef up positions. If the market rally really strengthens, those chances will come. If the indexes whipsaw with weak breadth, you’ll be glad you’re mostly in cash. Among growth ETFs, the Innovator IBD 50 ETF (FFTY) sank 3.6% last week, with several components suffering huge earnings losses. The Innovator IBD Breakout Opportunities ETF (BOUT) edged up 0.3%.
- Regarding the overall new energy vehicle (NEV) market, Lai said he remains “constructive” this year, but he believes the growth rate will decelerate sharply, to 23% in 2023 from 80% in 2022.
- But many chip plays had nasty sell-offs, including some huge earnings drops.
- As part of the same move, Barclays cut its price target to $10 from $18 in a note released on Wednesday.
- Despite the major indexes closing higher, there weren’t many opportunities to beef up positions.
- Lai cut his rating to neutral, after being at overweight since October 2020.
The latest filing shows that JPMorgan Chase held 420,200 put options of NIO worth about $13.3 million as of December 31, down about 0.6 percent from 422,900 at the end of the third quarter. Following today’s downgrade, shares of NIO stock are down nearly 2%. The EV company’s stock is also down 10% since the start of the year. Trading is also somewhat light, with about 25 million shares on the move. In addition to reporting standard equity and debt issues, institutions with more than 100MM assets under
management must also disclose their put and call option holdings. Since put options generally indicate
negative sentiment, and call options indicate positive sentiment, we can get a sense of the overall
institutional sentiment by plotting the ratio of puts to calls.
J.P. Morgan Said NIO Stock Can Double. It’s Now a Third of the Way There.
NIO also benefitted from JPM GL’s Morgan Money, a multi-currency, 24/7 trading and risk management platform. Morgan Global Liquidity (JPM GL) after its 2018 initial public offering. JPM GL’s USD liquidity solution satisfied NIO’s low risk tolerance,need for timely access to dollars and, importantly, its desire for security. As of December 31, JPMorgan held 7.64 million ADRs in NIO, worth about $240 million, according to the bank’s 13F filing with the SEC on February 11. TradeAlgo delivers unparalleled access to market tools with over 50 billion events processed daily. As reported by EV on Sunday, NIO‘s second Battery Swap Station in Norway is ready to open and the inauguration will be on August 15 at Vestby.
Several of those have earnings on tap, including AMD, Floor & Decor (FND), InMode (INMD) and ANET stock. The SMH chip ETF, which tumbled to its worst levels since mid-March, slashed weekly losses but was still below the 50-day line. A few names, such as Lam Research (LRCX) and AMD stock, are setting up near entries. But many chip plays had nasty sell-offs, including some huge earnings drops. The Financial Select SPDR ETF (XLF) dipped 0.15%, but rebounded to close just below its 50-day.
Monday Earnings, Sales
Nio lowered its fourth-quarter outlook for deliveries in December, citing disruptions to the supply chain caused by Covid outbreaks in China as a main reason for the change. “Furthermore, our 2023 delivery forecast (190k units or 56% growth) falls short of management’s ambitious goals ( k, doubling from 122 in 2022),” Lai added. The EV manufacturer NIO announced Wednesday the partnership with Formula Student Germany that will be held on August at the famous Hockenheim Circuit. Tomi Kilgore is MarketWatch’s deputy investing and corporate news editor and is based in New York.
Earnings season remains heavy this week, with Advanced Micro Devices (AMD) out late Tuesday and Apple (AAPL) due Thursday. Another Fed rate hike is on tap Wednesday, along with major economic data in the coming week. A big question is whether Fed chief Jerome Powell signals that the central bank will pause rate hikes. The price target reduction, Lai said, is due to a less aggressive multiple of 2.5 times he applied to 2025 enterprise value/sales and discounting it back at 12% to present value.
NIO Stock Slips After JPMorgan Downgrade
The financial institution also helped NIO’s treasury team enhance its governance, ensuring its liquidity management fulfilled both its own business objectives and US share listing requirements. The bank held 4,000 Li Auto call options worth about $100,000 in the third quarter, and by the end of the fourth quarter the number of these options was unchanged, but their value increased to $128,000. XPeng’s revenues peaked in 4Q21, at $1.34 billion, and have been trailing off since then. In 2Q22, the most recent quarter reported, the company had a top line of $1.12 billion; while down from the peak, that was still up 90% y/y.
NIO is a Chinese electric vehicle (EV) manufacturer designing manufacturing and selling smart EV’s. Crucially, the Wall Street behemoth now expects NIO to capture 7 percent of the cumulative EV market by 2025. At a more granular level, JP Morgan predicts that NIO will capture a whopping 30 percent of the premium EV segment.
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JP Morgan sharply raises NIO price target to $40, representing 85% upside potential
In addition, NIO’s treasury department needed security for its cash, USD liquidity across time-zones and above all, to avoid loss of capital. NIO will release its 3Q22 financial results on November 10, but we can get a feel for the company’s performance by looking at the Q2 figures, the most recent reported. The company had a total rental revenue of $1.54 billion at the top line, and a quarterly net loss of $412 million. The revenue total is in-line with recent quarters, while the net loss is the deepest since 1Q20. We’ll start with Nio, an EV company founded in 2014 and currently offering six consumer-oriented EVs on the Chinese market.
JPMorgan also will buy most of the assets, including about $173 billion in loans and $30 billion in securities. The market rally remains “under pressure.” Investors still need to see a little more market strength and a lot more buying opportunities. (3) We project a meaningful pickup in new model launches, especially in 4Q20, along with the new model, EC6. The new sedan model is scheduled to debut on “NIO Day” in December which should further enhance the company’s current product portfolio (of two SUVs- ES8 and ES6 and one crossover- EC6). The bank projects NIO to earn a ~7% market share in the passenger EV market by 2025 or specifically ~30% share in the premium space which Nio focuses on. “Our segmented cash solution allows us
to invest aligned with our values, which include liquidity and security over yield,”
says Sasa Wang, Director, Treasury, NIO.
