3 Chinese Electric Vehicle Stocks to Avoid on News of Didi's Delisting Last week, the Chinese ride-hailing giant DiDi Global (DIDI) declared that it would delist from the New York Stock Exchange. The news of DIDI's delisting heightened investor concerns about other...
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Last week, the Chinese ride-hailing giant DiDi Global (DIDI) declared that it would delist from the New York Stock Exchange. The news of DIDI's delisting heightened investor concerns about other U.S.-listed Chinese stocks, and the prices of shares of Chinese electric vehicle stocks NIO (NIO), XPeng (XPEV), and Li Auto (LI) declined in the wake of DIDI's delisting announcement. Considering the bleak growth prospects of these companies, we think investors are better off avoiding them. Read on.
Beijing-based ride-hailing giant DiDi Global Inc. (DIDI) declared last week that it would delist from the New York Stock Exchange "immediately" and begin preparations for a separate listing in Hong Kong. Consequently, the U.S. shares will be converted into "freely tradable shares" on another international exchange. Shares of DIDI declined sharply in price after the announcement.
With DIDI's delisting, the decades-long, trillion-dollar relationship between China and Wall Street may be coming to an end. The move raised further speculation regarding Chinese EV stock listings moving to Hong Kong. This would leave U.S. investors trading ADRs with underlying stocks in the ADRs being Hong Kong-listed.
Amid the rising uncertainties, we believe investors are better off avoiding Chinese electric vehicle stocks NIO Inc. (NIO), XPeng Inc. (XPEV), and Li Auto Inc. (LI). The shares of these companies plunged last week on the news of DIDI's delisting.
Click here to checkout our Electric Vehicle Industry Report for 2021
NIO Inc. (NIO)
Headquartered in Shanghai, China, NIO designs, develops, manufactures, and sells smart electric vehicles in China. The company's NIO Power provides mobile internet-based power solutions for battery charging and battery swap facilities. NIO markets and designs technology development activities, and manufactures e-powertrains, battery packs, and components.
NIO's total revenues increased 116.6% year-over-year to RMB9.81 billion ($1.54 billion) in the third quarter, ended September 30, 2021. However, the company's loss from operations grew 4.9% from its year-ago value to RMB991.93 million ($155.63 million). Its net loss came in at RMB835.3 million ($131.06 million). Also, the company's loss per share rose 85.7% from the prior-year quarter to RMB1.82 ($0.29).
NIO has failed to beat the consensus EPS estimates in three of the trailing four quarters. The company's EPS is expected to decrease 5.5% in the current year. The stock has lost 22.6% in price over the past nine months and 29.1% over the past year.
NIO's POWR Ratings are consistent with this bleak outlook. The stock has an overall D rating, which equates to a Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an F grade for Stability and a D grade for Value and Quality. We have also graded NIO for Growth, Momentum, and Sentiment. Click here to access all NIO's ratings. NIO is ranked #50 of the 64 stocks in the F-rated Auto & Vehicle Manufacturers industry.
Click here to check out our Automotive Industry Report for 2021
XPeng Inc. (XPEV)
Smart electric vehicle company XPEV is headquartered in Guangzhou, the People's Republic of China. The company's primary products include environmental-friendly vehicles, an SUV (the G3), and a four-door sports sedan (the P7). The company also provides sales contracts, maintenance, supercharging, vehicle leasing, and ride-hailing services.
During the third quarter, ended September 30, 2021, XPEV's total revenues increased 187.4% year-over-year to RMB5.72 billion ($897.59 million). However, the company's total operating expenses grew 52.4% from its year-ago value to RMB2.8 billion ($439.81 million). Its loss from operations rose 3.4% from the prior-year quarter to RMB1.8 billion ($282.88 million). Also, the company's net loss increased 38.8% year-over-year to RMB1.59 billion ($250.26 million).
XPEV's EPS is estimated to decline 5.9% per annum over the next five years. The company has failed to surpass the consensus EPS in three of the trailing four quarters. Its stock has fallen 6.1% in price over the past month and 15.5% over the past year.
XPEV's poor prospects are also apparent in its POWR Ratings. The stock has an overall D rating, which equates to Sell in our proprietary rating system. Also, the stock has a D grade for Growth, Stability, and Quality.
In addition to the POWR Rating grades I have just highlighted, one can see XPEV's ratings for Sentiment, Value, and Momentum here. XPEV is ranked #51 in the Auto & Vehicle Manufacturers industry.
Li Auto Inc. (LI)
Formerly known as Lead Ideal Inc., LI is a Beijing-based new energy passenger vehicles (NEV) automaker that designs, develops, manufactures, and sells smart electric vehicles. The company also offers Li ONE, a six-seat electric SUV equipped with a range of extension systems and smart vehicle solutions.
For the third quarter, ended September 30, 2021, LI's total operating expenses increased 182.2% year-over-year to RMB1.91 billion ($299.69 billion). The company's loss from operations came in at RMB97.8 million ($15.35 million). Also, its net loss amounted to RMB21.51 million ($3.38 million), and the company's loss per share came in at RMB0.01 ($0.00) during the period.
LI has failed to beat the consensus EPS estimates in three of the trailing four quarters. The company's EPS is expected to remain negative for the current year. The stock has declined 8% in price over the past month and 11.8% over the past year.
It is no surprise that LI has an overall D rating, which equates to a Sell in our POWR Rating system. Also, the stock has a D grade for Stability and Value.
Click here to see the additional POWR Ratings for LI (Momentum, Growth, Sentiment, and Quality). LI is ranked #40 in the Auto & Vehicle Manufacturers industry.
Click here to checkout our Electric Vehicle Industry Report for 2021
NIO shares fell $0.45 (-1.40%) in premarket trading Monday. Year-to-date, NIO has declined -34.04%, versus a 22.46% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.
The post 3 Chinese Electric Vehicle Stocks to Avoid on News of Didi's Delisting appeared first on StockNews.com
