Nio (Short Idea)
This week on the Intelligent Investing Podcast, I sat down with Jeremy Raper. One of the stock ideas we discussed was shorting the company, Nio.
You can listen to the full The Intelligent Investing Podcast episode, here.
Jeremy believes that Nio is one of the most anomalous mispricings of a security he has ever seen in his career. Nio is a Chinese EV player that is likely structurally unprofitable and unable to scale, burning tons of cash. Furthermore, all the key executives have left, the company has taken on a ton of debt, and there’s no update on two emergency financing transactions.
Gone Dark
The company has essentially 'gone dark' (stopped reporting material information) - peculiarly a perk only available to Foreign Private Issuers (FPIs) despite being listed on the NYSE.
In any case, the company has likely run out of cash in the very near term, or will have to do an emergency financing transaction that wipes out the ADR equity.
Nio Bonds
The bonds trade at 30c on the dollar implying an EV for the whole company of <$500mm while the stock market cap ($2.3bn) implies an EV for the company >$4bn, or 9x that implied by the bonds.