Junheng Li: NIO is “an appetizing opportunity to short.”

In a note sent out to her well-heeled clients, noted China analyst Junheng Li slaughters Chinese electric carmaker NIO as a potentially fraudulent stock, saying that NIO’s “recent volatility is likely to be driven by manipulation to elevator the share price so that pre-IPO investors can make profitable exits upon the IPO lock-up expiration on March 12th.” Reading through the note, one gets the impression that NIO could not even deserve its “carmaker” moniker. “Note that NIO does not make anything. It is an internet marketing company,” writes Ms. Li, chief analyst of China-focused JL Warren Capital.

NIO’s cars are made by China’s JAC, characterized by Ms. Li as a “third-tier Chinese SOE truck manufacturer with limited experience in manufacturing passenger vehicles.” She reports that NIO cars induce nausea with the driver because of the strangely delayed response when accelerating and braking.

After NIO’s CEO William Li (no relation) was interviewed on “60 Minutes” on February 24, the stock popped by 30% in the 2 days after the show. It gave up some of its gains after Ms. Li’s note reached its subscribers.

NIO sold 7,980 of its electric cars in the last quarter of 2018, more than doubling the sales in the preceding quarter. Ms Li says that was due to sales pulled-forward before the expiration of EV subsidies in the Chinese market. The subsidy expiration was later postponed, and it is now expected for April 1.

As for NIO CEO Bin “William” Li, Ms. No-Relation-Li reminds her readers that NIO looks a lot “like Bitauto, which NIO current CEO Li Bin founded in 2000 and listed on NYSE in 2010. In 2014, Li Bin hyped BITA’s grand plan to transition from an online media only to off-line to on-line e-commerce business to global investors, pushing stock from the …continue reading