The explosion of the action of Nio reaches the manufacturer

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The electric car manufacturer Nio has quickly moved up a gear. The second trading day after its IPO on the NYSE, its shares rose 76%. This has turned China's response to Tesla's automaker into a technology star.

Some skepticism deserved that Nio sell his stock at the bottom of the indicated price range. For an ephemeral moment, its valuation – close to $ 7 billion at the close on Wednesday – corresponded roughly to the sector in which it operates. By applying his rival Geely's net profit margin of nearly 12% and his valuation seven times higher than his earnings forecast, Nio recorded a net income of just over $ 1 billion. This would likely be within his reach if he could operate his manufacturing partner's plant at full capacity and then sell each of the 120,000 vehicles produced.

With a valuation of $ 13 billion, expectations are much higher. Nio is expected to produce more than twice as many vehicles as current capacity allows and find buyers for everyone. In August, Nio had delivered approximately 1,600 cars, generating a turnover of $ 7 million and a significant loss.

The Chinese hype could explain this enthusiasm. Nio promoted connected cars served by a dedicated app and partnerships with Tencent and JD.com for music streaming and e-commerce. These types of services resonate with investors. Novice market shares of Chinese market on N.Y.S.E.E. and Nasdaq, to ​​the exclusion of Nio, have recorded an average increase of 64% this year, according to Dealogic. For all new listings in the Big Apple, the increase is more moderate by 28%.

Tesla, too, is trading at more than 100 times estimated earnings for 2019. Nio may have captured some of this exuberance late. It is nevertheless an unexpected and improbable turnaround.