NIO is a new public offering for investors and so far, the stock has had a wild ride. Just like with Sonos, which I wrote about recently, NIO looks great from afar, but once you start digging into this company, you see red flags everywhere.
Still, many investors will ignore these red flags because they see this company as a cheaper alternative to Tesla. While there are comparisons between the two companies, they are worlds apart in where they currently stand.
In this post, I am going to walk you through NIO and show you why this stock is one to forget about.
Who Is NIO?
NIO (NYSE: NIO) is an electric car manufacturer based in China and the stock recently went public here in the United State.
The company is in its infancy in terms of manufacturing cars. The company began making deliveries of its first production vehicle, the ES8, in June and through the end of August, they shipped just under 2,000 vehicles.
They already have plans to begin work on a second model, the ES6, with initial plans to have it in production by the end of 2018 and start making deliveries in the first half of 2019.
While pricing has not yet been announced for the ES6, the price for the ES8, which is comparable to the Tesla Model X, has a price tag of just under $68,000.
This is a steep discount when compared to the Model X.
Looking longer term, NIO has the goal of selling 50,000 vehicles annually by 2020.
The Red Flags With NIO
Now that you know a little more about NIO, we need to dive into the red flags that should make you run away fast from this stock.
First is the bottom line. The positive news is that NIO began to produce revenue this year, $7 million through the first half to be exact.
But the problem is the cost of doing business. During this same time, the company reported a net loss of over $500 million.
Making matters worse, for the entire year of 2017, the net loss for NIO was roughly $760 million. If the second half of 2018 is like the first half, the company’s net loss is going to shatter the loss from last year.
