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NIO DD and why the dip has made it undervalued

Updated: Mar 9, 2021

Company Biography:

"NIO Limited designs, manufactures, and sells electric vehicles in the People's Republic of China, Hong Kong, the United States, the United Kingdom, and Germany. The company offers five, six, and seven-seater electric SUVs. It is also involved in the provision of energy and service packages to its users; marketing, design, and technology development activities; manufacture of e-powertrains, battery packs, and components; and sales and after-sales management activities. In addition, the company offers charging solutions, including Power Home, a home charging solution; Power Swap, a battery swapping service; Power Mobile, a mobile charging service through charging trucks; Public Charger, a public fast-charging solution; and Power Express, a 24-hour on-demand pick-up, and drop-off charging service. Further, it provides value-added services, such as statutory and third-party liability insurance, and vehicle damage insurance through third-party insurers; repair and routine maintenance services; courtesy car services during lengthy repairs and maintenance; and roadside assistance, as well as data packages. NIO Limited has a strategic collaboration with Mobileye N.V. for the development of automated and autonomous vehicles; and collaboration agreements with various manufacturers for the manufacture of ES8, a six or seven-seater high-performance electric SUV."

Looking at the financials:

-SEC Filings: NIO Announces Completion of Offering of 68 Million American Depositary Shares. This is worth around $3 Billion; this is good because if you look at the NIO balance sheet from 2020 you'll see that they have total liabilities of $2.9 Billion. Their $3 Billion stocks offering is likely to be used to pay off their total liabilities, making them completely a debt-free company.

Looking at the deliveries:

-NIO delivered 5,291 vehicles in November 2020, increasing by 109.3% year over year.

-NIO delivered 7,007 vehicles in December 2020, increasing by 121% year over year.

This is 25% more vehicles in just one month. This shows that NIO is becoming a lot more efficient at producing their cars and delivering them more quickly.

NIO vs TESLA car prices

The ET7 model from NIO starts at around $69,000. Which is still more expensive than a Model 3 which costs around $35,000. The ET7 seems to be competing against the Model S, which costs $69,420.

NIO car features that Tesla doesn't have.

NIO uses Li-Dar sensors technology where Tesla does not. "Advantage of LiDAR is that it gives self-driving cars a three-dimensional image to work with. LiDAR is extremely accurate compared to cameras because the lasers aren't fooled by shadows, bright sunlight, or the oncoming headlights of other cars". uses the battery swapping method which means that the cars don't need to be charged. The cars just go to a battery swapping station and swap their battery in under 5 minutes with a fully charged one.

NIO Technical Analysis

On the BlueWave, NIO has gotten a GreenDot buy Signal on the Daily Timeframe which is rare, combine it with oversold RSI and you got yourself a double confirmation that its time to buy the DIP.

Price Target 1 : $45

Price Target 2 : $51

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