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Citron Research, a well-known short-circuit institution, published a report on Friday (13) indicating that the Chinese market of electric car manufacturer Weilai Auto will face pressure from the Tesla Model Y to cut prices. He believes the stocks are currently speculative. The reasonable price of the stock should be US $ 25. After the news broke, Weilai Automobile fell almost 8% on Friday (13).
Andrew Left, founder of Citron Research and a well-known short seller, stated in the report that investors in the market have obviously not noticed the price of the Tesla (TSLA-US) Model Y in China, which is very important to NIO-US. . What type of threat is produced.
The report cited the Deutsche Bank (DB) report from last week. Deutsche Bank estimates that Tesla will benefit from the expansion of the Shanghai Super Factory. NIO’s EC6 and ES6 models may slow down NIO’s order momentum and near-term market optimism.
China’s Tianfeng Securities said that Tesla’s business in China continues to grow. Considering that Chinese-made electric vehicles (MICs) will greatly save production costs, Tesla’s strategy of returning gross profits to customers is likely to make the Model Y reasonably priced. It will drop to $ 41,000.
Bloomberg analyst Steve Man also believes that a new wave of price cuts for high-end electric vehicles is looming in China, which could trigger fierce competition in the Chinese electric vehicle market.
From the perspective of valuation multiples, Citron’s research report indicated that Weilai Automobile’s valuation has always been highly correlated with Tesla in the past. However, recently there has been a significant gap between Weilai Automobile and Tesla. Lai Auto’s current valuation multiplier (NTM EV / Sales) is 17 to 18 times, which is almost a 2x premium compared to Tesla’s 9 times, establishing the largest multiplier gap in history. of the two companies.
In terms of market share, Tesla’s delivery speed of 15,000 vehicles is similar to that of Weilai Automobile. However, Tesla’s 45% market share in the US electric vehicle market puts Weilai Automobile under pressure, and it is also in the Chinese market. Step by step, the current market share has gradually increased to 3%, and last month Tesla’s car sales in China were more than double that of Weilai Automobile.
In terms of the market, Citron Research said Weilai Automobile’s current speculative sentiment is high and the empty order balance has fallen to a two-year low. At this stage, investors who buy Weilai Automobile are not optimistic about the company’s prospects, but favor the increase in share prices. The capital gain generated by the reasonable price of the shares should be US $ 25, which means that Weilai Automobile is still 48% down.
Weilai Automobile has risen about 12 times this year, was up 12.2% in intraday trading on Friday, and then fell 7.74% to close at $ 44.56.
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