So the biggest question in the world
right now for NIO shareholders is: Will
NIO stock get delisted from the new york
stock exchange? There is a lot of
different sources giving conflicting
information but the truth may well shock
most investors.
In just the past two weeks NIO stock has
dropped more than 25 percent and the
reasons for this are quite simple. The
question is whether this downward trend
will continue
or: Is (NYSE: NIO) stock a buy right now?
So in this video today I will discuss what is
happening why NIO has been dropping
and if this is the bottom or not
remember NIO is now at the lowest point
in the past six months and I will look
at what professional wall street
analysts think of the current situation.
If you've been watching my channel over
the past few months you will have seen
the huge gains that we have been making
even while stocks have been dropping. So
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whether investing in this or any other
stocks now let's dive into it.
So it all starts with this:
DiDI de-listing could spell the end
for chinese stocks on wall street. The
era of big chinese companies heading to
the united states to raise money may
have just come to an end.
DidI announced friday that it would
immediately start the process of
delisting from the new york stock
exchange and pivot to hong kong.
This all began shortly after its 4.4
billion IPO in june, chinese regulators
banned dd from app stores in china
saying it broke data privacy laws
and posed cyber security risks.
Didi's
repatriation looks likely to be the
start of a trend and the market should
expect others to follow
investors in such stocks
have been on the edge for months the s&p
and bny china select adr index which
tracks the top us listed chinese firms
has plunged 40% so far this year.
Two developments this week further
underscore the fact that financial ties
between the united states and china are
freeing
on thursday the usa finalized rules that
would allow it to de-list foreign firms
that refused to open their books to the
country's regulators
china has for years rejected u.s audits
of its firms citing national security
concerns and beijing is set to ban the
loophole that allowed companies like
alibaba and didI to list in new york in
the first place.
today's companies especially established
market leaders or those in certain tech
sectors
will likely face increasing pressure to
list on china-controlled exchanges
any price for this stock is too high a
price to pay NIOs adr could be severely
impacted if the ccp
begins to urge chinese companies to drop
their abroad stock listings
in q3 NIO's electric vehicle deliveries
increased but the risk is not worth the
potential benefit
the ccp is pressuring chinese
enterprises to leave foreign exchanges
and discourages them from registering
adr shares on foreign exchanges
a d listing would be a major setback for
electric vehicle investors in the united
states unlike alibaba jd or dd NIO and
its peers in the electric vehicle
industry have escaped greater
scrutiny and regulation
the ccp is said to put more pressure on
chinese companies that are deemed to be
too patriotic
dd falls under this
category
chinese authorities ordered dd's app to
be removed from the chinese app store
the official reason given was the dd had
violated data laws
dd's data collection practices were
deemed illegal
the move on dd is a bad omen for other
companies with adr shares NIO is just
one of many companies that could be
affected by the ccp's long-term goal of
making foreign
stock listings of chinese companies
illegal in the event of a de-listing
announcement NIO's adr shares are likely
to drop significantly as investors try
to liquidate their holdings the key
point to grasp here is the chinese
companies themselves request that their
adr shares be delisted and traded
and trading be halted in order to
appease the ccp this is not a result of
enforcement actions taken by u.s
regulators
the adr risk is a significant risk that
raises fundamental questions such as how
certain are you as an investor in an
electric vehicle company that you
actually own
a stake in
unfortunately there is no certainty in
the answer the ccp could arrive at any
time of the week and declare that the
time for chinese companies to use adr is
over what happens next
in conclusion
the author doesn't know whether the ccp
will pull the rug out from under him or
not
and can you be sure that you actually
own and trade what you think you own
in the case of NIO and other chinese
companies with adr listing
in the united states the answer is no
that is why any price for NIO is too
high to pay
now this is not the first time that this
risk of d-listing has been thrown around
regarding chinese companies listed on
u.s exchanges
as retail investors we seem to have very
short memories or maybe it is the fact
that the majority of retail investors in
general tends to
to change every year
some might not remember that we've seen
this before
in early 2021 the same story was being
spread except it was the u.s not china
that was going to de-list these
companies and how many of 2021's
investors
were even investing back in 2019 when we
had a similar story there was reports
that these companies would be delisted
so this is nothing new
and this is why I like the next seeking
alpha article it at least acknowledges
that the risk has always been there
so what about delisting risk
the risk has always been there even
without dd
therefore it's not like it's something
new for investors to consider
moreover
readers should be aware that dd is
working on its de-listing plans while
pursuing a listing in hong kong
didI earned beijing's hour
because it did not receive approval for
its listing and it reported that the
chinese regulators are not working on a
plan to de-list
all its companies from u.s exchanges
the ministry of commerce are formulating
new policies to regulate how the
variable interest entity a vie structure
can be used overseas listings through vi
structures will not be completely banned
and companies will be regulated
differently based on which sector they
come under
therefore it's unlikely that regulators
will adopt a blanket approach towards
all chinese companies in any case a
d-listing is also unlikely to be the end
of the world
the adss are an entirely fungible
if these companies seek a listing in
hong kong therefore what investors might
have to deal with in the short term
could just be a temporary headwinds and
price weakness
but such challenges could also provide
great opportunities to add more exposure
dd plans to sell shares in hong kong and
d-list in the us reduces the risk of
messy forced d-listing by regulators in
both china and the u.s and may signal
the chinese authorities crackdown on it
has peaked the company's
statement bolsters our view that hong
kong ipo will come before a usd listing
with a seamless conversion of ads into
the hong kong listed shares
so the ultimate question becomes is NIO
stock a buy
personally I think that NIO is
undervalued the author of this article
thinks that it's undervalued and so do
wall street analysts which I will look
at in just a moment
NIO operates in one of china's most
important industries beijing wants its
leading nev players to grow bigger and
dominate the world in september china's
minister for industry and information
technology emphasized that looking
forward ev companies should grow bigger
and stronger there is too many ev firms
on the market right now the firms are
mostly small and scattered
the role of the market should be fully
utilized and we encourage merger and
restructuring efforts in the ev sector
to further increase market concentration
that does not sound like the words of a
man intent on destroying an industry
and finally I have this article from
thursday evening which is a very good
read morgan stanley pounds the table on
NIO stock the stock market is often
noted to be forward looking beast and
look ahead is exactly what investors
should do when considering the case for
NIO says morgan stanley's tim sao
it's time to turn the page a superior
ecosystem broadening customer and
distinct branding make the setup unique
and favorable for NIO to gather strength
in 2022
on november 29th the et7 model
successfully rolled off the assembly
line
although doubts linger that the model's
market entrance
could be delayed
it's noted that successful
pre-production gives NIO a three-month
lead time to ramp up output and prepare
manufacturing necessities getting the
et7
to market on time could also cam
investor nerves regarding the launch of
the et5 scheduled for mid 2022
a company needs other distinguishing
features and here xiao counts NIO's
broader range of capabilities beyond the
cares these include software services
and energy solutions over the past year
the company has continued to grow with
service network
the pace of deployment has accelerated
from around 200 battery swap stations at
the end of 2020 to 300 by july and 600
at present
NIO stands to benefit
from its robust user ecosystem and its
strong brand with NIO being up there
alongside names such as tesla and bmw
according to the development history of
the chinese auto industry and
particularly for luxury brands such as
mercedes and bmw branding could be a key
advantage for automakers to expand their
product spectrum
to conclude this while the share price
has dropped so much lately
it would have been easy for this analyst
to lower his price target or issue a
hold rating but he has actually raised
his price target to 66 dollars and given
NIO a buy rating
let's not forget that in the ev industry
the only company that has sales and
production that competes with NIO is
tesla
so just for a quick comparison NIO is
considered to be the tesla of china
NIO is now valued at only 51 billion
dollars
while tesla is valued at 20 times this
at just over 1 trillion
so guys that brings us to the end of the
video if you've watched all the way
through then please hit that like button
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what do you think will happen next do
you think that china will call for the
usd listing of all chinese firms from
the u.s stock exchanges or do you think
that dd being delisted is an isolated
incident and if so what do you think the
future holds for companies like NIO
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