r/nio
Brainstorming and worrying; can this be the scenario unfolding ?
Author fears NIO is deliberately undervalued by institutions to take it private cheaply before relisting higher.
- NIO dominates the luxury EV market in China with increasing deliveries and ASP.
- High profit margin models like ES8 and ES9 are highly successful.
- Claims profitability has been achieved and EPS will continue to grow.
- Share price is allegedly being deliberately suppressed and manipulated by institutions.
- Risk of a low-ball buyout to take the company private and wash out retail investors.
Can this be the scenario that’s unfolding in the background while NIO shares trade at mind boggling levels despite NIO dominating the luxury EV market in China.
Both delivery and ASP increasing substantially with high profit margin models like ES8, ES9 having taken the Chinese market by storm. Most significantly, this is happening at a time when sales of the mass market EV makers are in fact going down or stagnating!
Long awaited profitability have been achieved two quarters ago! The EPS going forward will only increase . Still, THE SHARE PRICE HAS BEEN DELIBERATELY AND CLEVERLY KEPT AT A RIDICULOUS VALUATION FOR A VERY LONG TIME . NIO management has been earily quite about this, only venting frustration about the US market from time to time.
Here is a possible scary scenario for the retail investors;
- Listing primarily in HK cannot stop the share price from being manipulated ! They may not be able to short but nothing will stop US institutions from market making in HKSE and keeping the stock at prices they can accumulate cheaply there as well.
3 Keep in mind that UAE sovereign fund owns 20 % of the company and few other institutions together also own I believe around 20-30%
NIO maybe in the opinion that the best option is to take the company private to realize its full value. And for this they may offer existing shareholders a buyout, say at an opportunistic $8-10 range while the shares are incredibly depressed at $5!
The funding of this acquisition maybe coming from China + UAE + few large institutions who in the future plan to participate in the private offering. Once all delivery and revenue improvements reach a point that NIO’s fundamental market value become undisputed , they can then list the shares in HKSE at say 50-60$ having previously given portion of the shares to private investors, at a much lower price .
As it happens with all new public listings , the institutional owners will then promote the stock and NIO will be one of the best blue chip companies in Chinese stock market. In process, the dreams of us, the believers in this amazing company will die, having tendered our shares to the buyout offer.
Any opinions on why it can or can’t happen! Am I missing something which may prevent this from happening?