Chinese NIO stocks grew significantly as Tesla's rival surpassed investors' expectations.
In just 2 years, the company has experienced both ups and downs. In 2018, it entered the New York Stock Exchange for the first time with shares that cost US $6.26. As a result of the fall in the value of the NIO itself, the cost of its shares also fell to US $ 1.19. After the company published its recent profit and loss statement, its shares have risen by more than US $1 and now the value of one share is US $3.47. Such figures surprised investors as they expected the stock to fall by US $0.34.
Following the results of Q3 2019, NIO's profit increased. Besides, next year the number of deliveries of produced cars is expected to increase even more. The company's revenue showed an increase of 21.8% compared to Q2 2019 and 25% compared to the last quarter of last year.
The company's remarkable success does not change the fact that it is all at the depth of its investment cycle. This means that NIO is still losing money. Gross profits from car sales are particularly bad. If last year it was -4.3%, this year it reached the level of -6.8%.
At the moment, the NIO does not cover its own expenses on income, it only consumes money and is in a state of constant demand for additional money.
The letter of income of the NIO said:
"The Company with continuous loss and negative equity. The Company's cash balance is not adequate to provide the required working capital and liquidity for continuous operation in the next 12 months. The Company's continuous operation, which has also constituted the basis of preparing the Company's third quarter unaudited financial information, depends on the Company's capability to obtain sufficient external equity or debt financing. The Company is currently working on several financing projects, the consummation of which is subject to certain uncertainties. The Company will announce any material developments or information subject to the requirements by laws."
An increase in the value of NIO shares could be one way of solving the problem of the need to get additional money for its growth and development. In addition, shipments are expected to increase by two thirds to more than 8,000 vehicles in Q4 2019.
NIO's revenues are expected to grow strongly in the current period, even in close competition with Elon Musk.