Long $NIO. Much more than the “Chinese Tesla”. Absurd short interest ignores the compelling product and patient investor base. Short term target – $12
After years of battling the “Tesla Story” Citron learned to recognize the opportunities created by total industry disruption and to disregard today’s numbers when considering the value of the disruptor. We also learned not to be short a disruptor with a cult-like following and a large outstanding short interest alongside a patient investor base.
With that in mind, we introduce NIO, and explain the real story that Wall St. has totally missed. Just like Tesla was not a simple U.S. electric car story, NIO is so much more than just a Chinese electric car story. NIO’s visionary management is revolutionizing the high-end auto industry in China.
But first some background:
The Chinese government has made growing the EV market one of the country’s top priorities. As a result, it is nearly impossible to get a driver’s license for a combustion vehicle in major cities in China — a person needs to obtain a special license through a lottery system where the odds of winning are well below 1% (and then pay over $14K to purchase the license). In contrast, licenses for new EV are free and open to anyone.
This incentive structure has resulted in an obvious boom to the EV market and, in contrast to the overall slowdown in the Chinese economy; sales of luxury cars are seeing accelerating growth.
Now here is the sexy part that the number wonks are missing.