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Here's How Much Investing $100 In The 2018 Nio IPO Would Be Worth Today

Investors who owned stocks in the 2010s generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return for the decade was 250.5%. But there’s no question some big-name stocks did much better than others along the way.

Benzinga · 03/18/2020 10:59

Investors who owned stocks in the 2010s generally experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return for the decade was 250.5%. But there’s no question some big-name stocks did much better than others along the way.

Nio’s Difficult Run

One market laggard in recent years has been Chinese electric vehicle maker Nio Inc - ADR (NYSE: NIO).

Nio held its U.S. IPO back in September of 2018, selling IPO shares at $6.26 and raising $1 billion. Nio was hoping to follow in the footsteps of Tesla Inc (NASDAQ: TSLA) and become a huge stock market success, but enthusiasm for the stock soon began to wane as losses mounted and Nio has been forced to raise outside capital.

For years, Tesla also reported large losses and was forced to raise outside capital. However, Nio’s sales slumped in 2019, taking the wind out of the growth stock story.

In the most recent quarter, Nio reported a negative 12.1% gross margin, down from negative 7.9% a year ago. The company also reported negative net income of $352.8 million, a significant improvement over the $1.42 billion in negative net income in the third quarter of 2018.

Unfortunately, the path to profitability has been too long for Nio. In 2020 alone, the company has raised $200 million via private placements in February and another $235 million in private placements in March. In addition, the company signed a cooperation framework agreement with Hefei City in February that will help Nio raise $1.42 billion.

The fundraising rounds are helping Nio keep the lights on for now, but the COVID-19 outbreak in China couldn’t have come at a worst time for the company. Bank of America recently said Nio’s fundamental picture likely won’t get any worse in the near future, but its financing risk will linger for the time being.

Nio shares hit the ground running on the public market back in 2018, soaring as high as $13.80 within weeks of its September IPO. However, $13.80 still marks the all-time high for the struggling stock.

Nio hasn’t traded above its IPO price in over a year now. The stock plummeted to its all-time low of $1.19 in October of last year before improving fundamentals and additional financing gave it a big bounce up above $5 entering 2020.

2020 And Beyond

Nio shares traded as high as $5.65 following the phase one trade deal between the U.S. and China in January. However, the coronavirus outbreak now has Nio shares back below $3.

Despite the strong start to life on the public market in 2018, Nio IPO investors have taken a major overall hit at this point. In fact, $100 in GoPro IPO shares would now be worth $45.84.

Looking ahead, analysts still have high hopes for Nio in 2020. The average price target among the 13 analysts covering the stock is $28.13, suggesting 863.3% upside from current levels.

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