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NIO Prepares To Report Fourth Quarter Earnings As Stocks Retreat From Recent Highs

In the electric vehicle (EV) industry, profitability has often taken a backseat to future expectations. So when China-based electric vehicle maker NIO Inc (NYSE: NIO) opens the hood next week, investors will likely be more interested in its outlook for revenue and vehicle deliveries than in how much the company lost over the past week. the trimester. Except for one big glitch or one big surprise, of course. Earlier this year, NIO said it had delivered a record 17,353 vehicles in the fourth quarter. While that’s small compared to Tesla Inc’s (NASDAQ: TSLA) 180,570 deliveries during the quarter, the NIO figure represents a 111% year-over-year increase and beat the rising end of its 16,500 to 17,000 vehicle guidance for the quarter. . Speculative and Fundamental Drivers While the increase in deliveries is encouraging for NIO bulls, the company has been in the red. In other industries, you might expect modest share price action for a company that loses money with negative price-to-earnings ratios in the long run and in the future. Not so for NIO. Stock earnings accelerated last year and in the first part of this year, hitting a record high of about $ 67 in January. The action started in 2020 around $ 4 (see figure 1). FIGURE 1: HIGH VOLTAGE. On a percentage basis, the shares of Chinese electric vehicle maker NIO (NIO – candlestick) have given Tesla (TSLA – purple line) a run for its money over the past year. However, both NIO and TSLA have lost quite a bit of juice in recent days. Data sources: Nasdaq, NYSE. Chart source: thinkorswim® platform. For illustrative purposes only. Past performance does not guarantee future results. Part of that staggering gain likely came from overall market dynamics amid low interest rates, accommodative central banks, real and early coronavirus stimulus, and anticipation of a post-vaccine recovery. There may also have been an element of investors chasing momentum in a hot stock. It also helped raise $ 1 billion in funding from Chinese state-owned companies. It can also be argued that there may be more fundamental tailwinds helping NIO stocks accelerate in 2020. Demand for EVs has increased as battery life lengthens, costs decrease, more are built Charging stations and environmental concerns make their way into the public consciousness. But in the electric vehicle space, investor optimism about the potential of manufacturers can make companies appear larger than life. Call it the Tesla effect, as investor optimism has helped make that company the most valuable automaker on the planet by market capitalization. Still, like the vehicles it makes, NIO’s stock cannot accelerate forever. After hitting the record in January, stocks fell sharply. Some of that may be due to the profit taking and cool head that prevails before your earnings release. There may also be some caution around the tariff relationship between the United States and China, the world’s two largest economies. NIO options and earnings activity When NIO publishes earnings after the close on Monday, March 1, it is expected to report a loss of $ 0.07 per share, based on third-party consensus analyst estimates. Revenues are projected at $ 1.01 billion, 148% more than a year ago. Note: The consensus should perhaps come with an asterisk, as only a handful of analysts cover the company. The options market has valued an expected movement of the share price of around 11.5% in either direction around the publication of results. Implied volatility is at the 25th percentile as of Friday morning. Regarding the expiration of the March 5 options, the sell activity has been higher at the 35 and 40 strikes. But there has been more activity to the upside, particularly on the 50 and 60 strike calls. Note: Call options represent the right, but not the obligation, to purchase the underlying security at a predetermined price for a specified period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price for a specified period of time. Investors Get Connected In addition to earnings data, investors next week may be looking for new directions from the company. Top of the list: You are likely to be on the lookout for an update on battery technology from NIO. Batteries are the backbone of the electric vehicle market, as more efficient batteries that can store more energy mean that vehicles can last longer without charging, giving drivers more peace of mind. In January, NIO introduced its first sedan, called the ET7, which boasts driving ranges of more than 500, 700 or 1000 kilometers depending on the battery. Investors will likely want to know how pre-orders for that vehicle are going, with deliveries expected to begin next year. Investors are probably also looking at the competition. The EV market field has become more crowded, with new interest not just from legacy auto companies and EV startups, but also from big tech players like Apple Inc (NASDAQ: AAPL) and Amazon. com, Inc. (NASDAQ: AMZN). . Space for everyone? Still, despite the always crowded field, the pie is quite large (and ready to grow). Even if NIO never ventured outside of China, the world’s largest EV market is a pretty big playing field. Technology market analyst firm Canalys in a recent report forecast that 1.9 million electric vehicles will be sold in China this year, well above a record 1.3 million in 2020. As one Canalys executive put it in comments that accompanying the report: “With a share of just 6.3% of all passenger cars sold in China in 2020, electric vehicles have many years of growth ahead of them.” TD Ameritrade® comments for educational purposes only, SIPC member. Options involve risk and are not suitable for all investors Read Standardized Options Features and Risks Photo by Vlad Tchompalov on Unsplash See more from Benzinga.com Benzinga does not offer investment advice All rights reserved.

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