NIO's $7.6 Billion Question, Tesla's $99 Lane-Keeping, And Nvidia Without Its Founder

Obi (0:00)

The stock market now says all of NIO is worth about $7.6 billion. The cars, the factories, three brands, over 4,000 swap stations, all of it. Meanwhile, a rival brand sells one-fifth as many cars as NIO, and they just got priced at almost $5 billion.

Somebody's math is off. Also today, every flight in America got grounded. Tesla wants $99 a month to keep your car in its lane, and Microsoft wants to rent your gaming PC.

Let's get into it. I'm Obi. This is Courtside Financial. We start with NIO, and one question. What does $7.6 billion buy you? Let's go. Here's where things stand. NIO hit a 52-week low this week. The whole company is now valued at about $7.6 billion.

For comparison, XPong is valued at around $9 billion. Liatto is valued at around $12 billion. Now, here's the story that caught my eye today. Shangan, one of China's big state-owned car makers, is selling 10% of its electric brand, Avatar. The asking price puts Avatar's value at about $4.7 billion. So let's compare. Avatar delivered about 7,000 cars in October. NIO delivered over 34,000. Avatar's gross margin last year was 9.4%.

NIO's vehicle margin last quarter was 18.5%.

Avatar lost about 3.5 billion ren last year. So NIO sells almost five times as many cars at about double the margin, and it's valued at only about 1.6 times as much. And that's before you count the swap network. One more layer. By the latest numbers I could find, NIO has roughly $2 billion more cash than debt.

Back that out, and the market is paying roughly $5.5 billion for the actual business. Now, the honest part. Why would the market do that? Because NIO still loses money on the official books. Because October deliveries fell 15%.

Because Anvo is struggling. The market isn't crazy. I would say it's just scared. But look at the flagships. NIO's ES9 just did 10,000 deliveries in 49 days. The auto's rival flagship just passed 10,000 deliveries in under two months. The premium buyer in China, that buyer is still buying. The stocks just aren't getting credit for it. So what does $7.6 billion buy? A company, the market is pricing like a struggling startup. It's actually selling cars like an established luxury brand. December 1st, we get November deliveries. That's the next chance to change the narrative, change the story. Next, a Tesla story that's blowing up on the Chinese internet right now. Since 2019, every Tesla came with Basic Autopilot, cruise control that follows traffic and auto steer, which keeps you centered in your lane. Earlier this year in North America, Tesla pulled auto steer from new Model 3s and Model Ys. You keep the cruise control, but if you want the car to hold its lane, you subscribe to full self-driving, which is going to cost you $99 a month. One owner put it like this, a 2019 Corolla now has better driver assistance than a 2026 Tesla, unless you pay $100 a month. So why would Tesla do this? Follow the incentive. Reportedly, Elon Musk Pay package includes a target of 10 million active full self-driving users. Tesla reportedly has about 1.7 million. That's a long way to go.

Taking away the free version is one way to help close the gap. Here's why China is paying attention. Over there, the trend is going the opposite way. Chinese brands are putting highway and city driver assistance on cars that cost around 100,000 ren. Standard, no subscription. And here's my NIO take. NIO also charges a monthly fee, but it's for the battery. You pay and you get swaps, upgrades, and a lower sticker price. Tesla's fee is for something that you're used to getting for free.

One company charges you to add something, the other charges you to give something back. In the most competitive car market on earth, I know which one that I'd rather defend. Now for the story that won't quit, Nvidia. Look at the timeline. Sunday, Jensen Huang admits he was unfaithful to his wife, and the board says it has confidence in him. Wednesday, reports say that the board is meeting about removing him. Thursday, he's out. All this happened in four days. The stock fell more than 14% at one point Thursday before recovering some of it.

And the reaction from Silicon Valley has been loud. Reportedly, the CEO of Shopify called it a generational blunder. A former Twitter CEO reportedly predicted Nvidia will stumble within three or four years and hire him back. One analyst reportedly values the stock at $225 without Huang and $300 with him. But there's another side. The interim CEO, Collette Cress, has been the finance chief since 2013

In that time, Nvidia's yearly revenue went from about $4 billion to about $216 billion. She's seen every part of this well-oiled machine, and some on Wall Street are saying that this had to happen so that the company could move on. Then there's this successor race. The president weighed in and suggested Tim Cook. Quote, a legend replaces a legend. There's no sign that Cook is interested though. And I'll say it again. The spying allegation is still unproven. No charges have been reported. The board has said it has no reason to believe that any trade secrets were compromised. Tuesday is the test's first earnings call in 33 years without the once beloved founder. Not today. If you were at an airport this afternoon, you already know what I'm about to talk about. The FAA grounded departing flights nationwide. The stated reason, extraordinary circumstances and reasons of safety. The transportation secretary said a communications problem hit all of the country's in route air traffic control centers. By mid afternoon, over 7800 flights were delayed and hundreds were canceled. As I record this, the cause has not yet been confirmed. And separately, Microsoft has been dealing with a two day outage. We're talking about emails, Microsoft teams, the tools of half of corporate America.