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Actions of Nio Inc., dubbed "the Chinese Tesla," strengthened on Thursday despite one of Wall Street's first analysts, who reported many concerns about the Shanghai-based electric car manufacturer.
Bernstein's analysts noted that Nio's action was equivalent to the sale, saying that while many things "intrigue" them about the automaker, it's "unconvincing Nio's shares represent a solid investment."
They set a price target of $ 4.20 on Nio's US certificates of deposit, which would represent a 56% drop from Thursday's prices.
ADR Nio jumped 45% Thursday to $ 9.80, a day after their IPO in New York.
Nio Tuesday estimated its initial public offering at $ 6.25, the lowest in its range, to raise about $ 1 billion, and traded at $ 5.35 on Wednesday before recovering losses for finish at $ 6.60. ADRs traded up to $ 9.77 on Thursday.
Read more: To find securities to negotiate, visit the Internet in China
Some of Bernstein's arguments would be familiar to the following investors. Tesla Inc.Nio is considered a potential rival in China: Nio's cash, the potential inability to achieve "ambitious" volume targets, said Bernstein analysts, led by Robin Zhu.
In addition, there are indications that Nio's electric vehicles have lost booking numbers.
"In the longer term, we wonder if the premium EV segment will be large enough to support Nio's volume ambitions," analysts said. They predicted that the company would sell 50,000 vehicles by 2020 and 160,000 vehicles by 2025.
Nio will eventually overcome its manufacturing difficulties, but will face a distribution challenge, Bernstein analysts said.
Nio "will only sell to a small part of the Chinese market" because of the concentration of VE demand in large cities subject to license plate restrictions, as well as the company's lack of distribution, have they declared.
Nio plans to have 12 stores by the end of the year, but it's a third of Tesla, which sold 17,800 cars last year in China.
Bernstein's analysts also said they expect Nio to exploit the capital markets in the next 12 to 18 months, as its costs are "too high and its prices too low," they said. they declared. Nio's expenses are rising rapidly and the company will probably remain in deficit until 2025, they said.
This article originally appeared on MarketWatch.
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