2 Chinese Electric Vehicle Stocks Struggling With the Global Chip Shortage

: NIO | NIO Inc. ADR News, Ratings, and Charts

NIO – EV sales in China are rising rapidly, but the environment is quite competitive with foreign companies introducing new models, new upstarts, and production constraints. Given this situation, the Chinese EV stocks NIO Inc. (NIO) and XPeng (XPEV), which have experienced a dip in deliveries, might be best avoided.

The automotive chip shortage has been plaguing automakers for over a year, which has brought global vehicle sales down by 10% in 2021 compared to pre-pandemic levels. The pandemic had temporarily shut multiple factories over the globe, creating a supply-demand gap.

On top of it, the Biden administration has predicted the global semiconductor shortage would persist at least until the second half of the year. To curb the shortage, the United States House of Representatives recently passed a multi-billion-dollar bill for boosting domestic semiconductor manufacturing to compete with China.

Given this backdrop, the Chinese electric vehicle stocks NIO Inc. (NIO) and XPeng Inc. (XPEV) might be best avoided in the near term. These companies have experienced a dip in their January deliveries compared to December.

NIO Inc. (NIO)

NIO is a manufacturer and seller of smart electric vehicles in China. The Shanghai, China-based company offers electric SUVs, smart electric sedans and provides energy and service packages to customers.

Click here to checkout our Electric Vehicle Industry Report for 2022

On November 19, NIO announced closing its American Depository Shares (ADSs) market offering, raising gross proceeds of $2 billion before deducting commissions. The company plans to use the proceeds for general corporate purposes. However, it may reduce shareholder returns.

NIO’s total operating expenses increased 94.9% year-over-year to $463.28 million in the fiscal third quarter ended September 30. Net loss and net loss per share, attributable to ordinary shareholders of NIO, came in at $443.69 million and $0.28, up 140.7% and 85.7% from the same period last year, respectively.

Street EPS estimate for the quarter ended December 2021 of a negative $0.21 indicates a 31.2% year-over-year decrease. Moreover, NIO has missed consensus EPS estimates in three out of the trailing four quarters.

The stock has declined 58.2% over the past year and 43.7% over the past six months to close yesterday’s trading session at $24.69.

NIO’s POWR Ratings reflect this bleak outlook. The stock has an overall rating of F, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

NIO has an F grade for Stability and a D grade for Value and Quality. In the 69-stock Auto & Vehicle Manufacturers industry, it is ranked #57. The industry is rated F. Click here to see the additional POWR Ratings for NIO (Growth, Momentum, and Sentiment).

XPeng Inc. (XPEV)

XPEV is the designer, developer, manufacturer, and seller of smart EVs in China. Its offerings include SUVs under the G3 name and a four-door sports sedan under the P7 name. The company is headquartered in Guangzhou, China.

For the fiscal third quarter ended September 30, XPEV’s non-GAAP loss from operations increased 106.7% year-over-year to $263.83 million. Non-GAAP net loss rose 72.5% from the prior-year quarter to $231.58 million. Its total comprehensive loss came in at $251.62 million, up 25.5% from the same period the prior year.

The consensus EPS estimate of a negative $0.23 for the quarter ending March 2022 indicates a 64.3% year-over-year decrease. Moreover, XPEV has missed consensus EPS estimates in three out of the trailing four quarters.

Over the past year, the stock has declined 21.9% to close yesterday’s trading session at $37.17. It has declined 9.8% over the past six months.

It’s no surprise that XPEV has an overall F rating, which translates to a Strong Sell in our POWR Rating system. XPEV has a Stability grade of F and a Growth, Value, and Quality grade of D. It is ranked #58 in the Auto & Vehicle Manufacturers industry.

To see the additional POWR Ratings for Momentum and Sentiment for XPEV, click here.

NIO shares were trading at $26.10 per share on Wednesday afternoon, up $1.41 (+5.71%). Year-to-date, NIO has declined -17.61%, versus a -3.71% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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