• Small Cap Blasters

Is this electric vehicle maker the Tesla of China?

As a general rule of thumb, when Goldman Sachs makes a market call, you listen. With that in mind, when Goldman makes a market call on a $7 stock with a book value of $104 per share and diluted earnings per share of -$84, you need to look under the hood and investigate further. That’s exactly the situation we’re facing with NIO Inc. (NYSE: NIO) today.

NIO designs, manufactures and sells electric vehicles in China, the United States, Germany and the United Kingdom. It was founded in 2014 and is headquartered in Shanghai. Goldman initiated coverage of NIO last week – calling it the “Tesla of China.” High praise, indeed!

After all, China is far and away the world’s largest market for electric cars. And NIO is looking to use its geographic location to take market share away from Tesla. In the third quarter, NIO delivered 3,268 of its seven-seater SUVs, about 9% higher than expectations. Yes, they’re expensive – starting at $65,000.

And since NIO just went public in September, it’s been burning through cash. Its prospectus reveals it made $7 million in revenue – while burning through $502 million in the process. That’s $116,000 in losses per hour. Hey, nobody said competing with Tesla would be easy. We admire NIO’s passion – and with the support of Goldman, it most certainly bears watching as a potential small cap blaster.