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Nasdaq TSLA Tesla

Tesla and Nio Charging Ahead into Second Half of 2021, Says Analyst

Nasdaq TSLA Tesla
5 years 3 months ago

As electric vehicles (EV) chomp up more market share in the auto industry, two companies lead the charge. Tesla, Inc. (TSLA) and Nio (NIO) are both exclusively EV producers, so they can focus solely on their technology and business models. Both are vertically integrated, which minimizes dependency on global supply chains. Finally, sales at both companies have swelled well over 100% year-over-year. (See Tesla stock chart and Nio stock chart on TipRanks)  

Reporting on the companies' successes and future outlooks is Vijay Rakesh of Mizuho Securities, who explained that year-over-year, Tesla and Nio have increased their sales 121% and 112%, respectively. He expects Nio’s sales momentum to continue through the year’s end, and said that globally, “Tesla’s lead remains unchallenged.”  

Rakesh maintained Buy rating for both of the stocks, and declared a price target of $820 for Tesla, and $65 for Nio. For Tesla, this would reflect a possible 24.32% 12-month upside, and for Nio, a possible 29.25% upside, from Tuesday's closing prices.  

The five-star analyst spoke of a bright second half of 2021 for the two auto manufacturers. He stated that Nio could exceed the expected amount of battery swap stations by the year’s end, and that Tesla is planning to begin production at its two new Gigafactories in Austin and Berlin.  

Aside from Nio’s domestic competition from Li Auto (LI) and XPeng (XPEV), large traditional auto manufacturers are fumbling to get their responses out into the market. Rakesh wrote that Ford (F), Mercedes (DDAIF), and Volkswagen (VWAGY) are said to be finding it difficult to manage both conventional and electric engines in their product lines.  

There is, of course, a slight downside. Rakesh elaborated that Tesla could be facing a possible slowdown of sales in China, and its concentrated product line leaves it largely dependent on two particular models. Additionally, it is within the realm of possibility that both companies may be subject to production delays caused by the semiconductor chip shortages currently affecting global supply chains. 

However, the analyst remained staunchly bullish. He added that Nio will eventually begin its penetration into international markets, which could amount for 25-30% of its overall sales. He enthusiastically wrote that Nio “remains on track to be the first major Chinese EV OEM to realize commercial success overseas.” 

On TipRanks, TSLA and NIO have analyst rating consensi of Hold and Strong Buy, respectively. The average Tesla price target is $653.95, reflecting a possible 12-month downside of –0.85%. The average Nio price target is $63.63, reflecting a possible 12-month upside of 26.53%.  

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment. 

TipRanks

Uber Could Transport Investors to New Growth

Nasdaq TSLA Tesla
5 years 3 months ago

Uber Technologies (UBER) is a leading global mobility technology company that offers rideshare, food delivery, and shipping services through its technology platforms. The company operates in over 63 countries with a large customer network of over 110 million people. The vast majority (76%) of its revenues come from ride sharing.

The main value for UBER stems from fees it generates by matching riders/consumers with drivers/restaurants across its large network. Its competitive advantage stems from its massive network of app users, which entices drivers and restaurants to offer their services on its platform, in turn attracting more customers and launching a virtual growth cycle. (See Uber stock charts on TipRanks)

UBER Ups and Downs

The company has experienced massive growth since its founding and is expected to continue its momentum for the foreseeable future. Revenue is expected to grow by over 40% in both 2021 and 2022, while EBITDA is expected to grow by a whopping 74.4% in 2021 and 325.6% in 2022, as the company should finally reach bottom-line profitability that year.

That said, the company still faces some very real challenges. For one, the impending rise of autonomous vehicles from numerous major tech giants like Google (GOOGL) and Tesla (TSLA) could significantly hurt UBER’s ride share business and potentially even replace it with an autonomous taxi business. Additionally, UBER continues to run up heavy losses. Last but not least, its food delivery business faces significant competition from companies like DoorDash.

While the company is expected to grow into profitability within the next few years, any combination of increased competition, regulation, or disruptive technologies could harm its path to profitability and lead to significant shareholder losses.

Valuation Metrics

Despite these headwinds, UBER still possesses a strong competitive positioning due to its large swaths of consumer data and industry-leading network. Furthermore, the stock price has remained relatively stagnant since its 2019 IPO, allowing the business to grow into its once-lofty valuation. Its enterprise value to forward revenue is a very reasonable 5.59x, though its enterprise value to 2022 EBITDA is less attractive at 68.38x.

Wall Street’s Take

From Wall Street analysts, UBER earns a Strong Buy analyst consensus based on 22 Buy ratings, 4 Hold ratings, and 0 Sell ratings in the past 3 months. Additionally, the average UBER price target of $72.36 puts the upside potential at 42.4%.

Summary and Conclusions

UBER is a leading rideshare and food delivery technology platform with tremendous growth potential ahead. While it is not yet profitable and currently looks expensive on an EBITDA basis, the stock seems much more attractively priced when viewed in light of its revenue and long-term growth prospects.

If the company can weather competitive challenges and maintain its strong growth trajectory, eventually profitability will catch up with its valuation and the stock could generate very strong long-term returns.

Given that analysts are so bullish on the stock, it might be an interesting speculative investment at current prices.

Disclosure: On the date of publication, Samuel Smith had no position in any of the companies discussed in this article.

Disclaimer: The information contained herein is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities.

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