NIO Stock: THE TRUTH Stock Moe vs Everything Money
Felix e and this is going to be a fun one we are looking at a video that was put out by the guys from everything money you were taking a pad stop mo and is lovely cat now I want to get this because neither side is quite right here I would say and the everything money guys ever should respect to them and their channel but they're kind of dumbing down investment advisor I think in a way that isn't really quite logical as we going to go through a few little clips of what they said and when I tell you what I think of it and then I'd love to hear what you think of it and that we could all come to a happy conclusion on this so I'm going to turn this on financial advice always bear that in mind and let me show you the clip here I'll play just a Touch are you going to say is that the gross margins are his number but he's essentially right saying that their gross margins for nio is 17% for Ford it's about 10% so nio as you can see here is better from that point of view they made more money for Danny makes 10% and let's go back one step here if you're making 4.2 million cars you should have very very significant savings in terms of components manufacturing of plants are more efficient you buying everything in maths right I mean you buying you know literally 60 million wheels here where is your nio you buying 160000 so nio by his example making 42000 cars that last year's number then you would expect actually nios managing to go up substantially 100 x absolutely not that's not feasible it's more likely to go to end up somewhere north of the Tesla range perhaps 25% is sort of where Little Italy start to fizzle out you were going to get much higher than that but let's just go back one step so this is basically saying we should value a company by looking at another company's market cap and sales not the place where I would generally start it's an interesting thing to look at nothing wrong with looking at cells but it isn't quite how you would value a company in in a logical will that it's jump forward a little bit here with what he's saying I play you a funeral clips ok does that make sense no make no sense at all because he's saying that they're the same and that's kind of the one of the big floors on the argument is here he's saying that a new car and a Ford KA is the same right so he's saying he actually called new investors stupid stupid which is it is his prerogative but there is one big button makes largely ice cars old petrol cars actually be illegal to be illegal to sell this at some point in the next 15 to 20 years in the United States and earlier in in other parts of the world so so older tech manufacturing most of their components most of their designs all the engines last time these years it's pretty much worthless with the exception of their Brand and perhaps Sam design features of the car the loyalty of their customers that's the only value that I have the sport customer loyalty is a headache you need to close down the factories you need to fire most of the workers why because an EV car has substantially fewer parts you need substantially fewer employees and you need to redo the whole thing I thought I'll unionise so good luck with that one and then you need to hire a new people who understands evie's and can design evs understand that technologies you bringing a new people who are meant to work with the old crew that's getting fired how well you think that's gonna turn out that's the Blum the big all dice companies have so you are turning a Titanic around in in midstream where is with a pure EV play you're starting from scratch and in this particular instance in this industry the newcomers you've gone over the hurdle of manufacturing so you've gone past the most high risk element of being a start-up have a huge advantage clean slate the higher great big smile people that a lot of taxis here there and everywhere no cultural problems no issues there is in the Ford hang on we give more budget to the TV guys that means my crew and the ICC crew are going to get fired sooner now that's happening with me you're so that's one of the big differentiating factors many says I've got six and apartments someone else's 150000 I should be worth more because I have more growth potential not quite the same thing because those apartments are presumably comparable right now if he had 600 of the world's most desirable apartments in the world they would have a higher valuation than the average rubbish 250000 but they still went through all that much and 150000 doesn't have to demolish 140000 of those apartments that's the problem with foods that I quite like the property analysis here because forward as a demolish 95% of it's business of its workforce of its factories it's tech have to throw it all out that's a really hard thing to do for management is to do that really really hot so I was going to cost a lot of money and then that some of the money so he goes on to basically bang on a little bit more and I'll skip forward a little bit here so we can see one or two more clips ok know that so he then goes on to say that companies that issue shares I like the world's worst thing ever if you ever buy them you're an idiot and did a looting and so on now I get the dilution of course is right on that if you add an extra 50% shares and you grow 50% as a shareholder you are where you started but if you don't like companies issuing shares and raising money that way you should never buy any stock because in IPO it's back to nature exactly that event they are diluting the ICU and chairs they are raising funds and every single growth company ever has done it so what he is doing here Easter applying a rather narrow minded value investor proposition to growth companies and that would mean you would never buy a growth company ever like ever in a great deal of my boyfriend using value stocks nothing wrong with a knife example think that Microsoft your PayPal Adele yewstock site I'm not that sort of narrow-minded on that and it's fine if you're anywhere do that totally great but I don't think one necessarily exclude the other I would put the majority of my money into the more safer stocks and smaller percentages into the the growth stocks comparing apples and pears I'd say this is sort of Barnes and Noble vs Amazon in 2000 where you could say why is Amazon valued like this it's Madness they're going to get that business is totally crazy you know we already have a bookstore isn't it brilliant it's a little bit like that now let's look at some other numbers of why I would never ever by Fort the matter how cheap it is the valuation number so that another people look at a lot of people the first row is 4 and I've got new and I've got Tesla here just so we have a comparison a Ford price-to-book 1.5 look super cheap right never look at price to book some point this number price-earnings is 15 years negative because I'm losing money Tesla 342 again it doesn't really tell you much and I'm going to show you why doesn't tell you much let's look at price over the next 12-months sales as projected Ford again supercheap is 0.4 times the next 12-months trading as a fraction of revenue nio at half of what Tesla is in which kind of makes sense China discount in and where they are and that sort of thing so why is that well there was one very good reason for this and that is when you look at for debt levels for debt over equity is 427% so for every share they have they have four times as much debt and put that 65% for Tesco at 45% and to be honest phone at 27% is a pretty scary number there is a metric for this called the quick ratio which is a standard ratio which basically tells you how likely are businesses to grow out of business into bankruptcy you want your quick ratio to be greater than one otherwise don't buy a stock that will be my take on it Ford is 0.3 and that's because there's a serious risk they could actually got a business ok you might say they're going to get bailed out and so on test that 1.12.3 because actually new is sitting on tons of cash and relatively little yet the other reason is that Ford as a net income vs the real profit that a bit down on something is the real profit margin of 5% so so if you close down Ford sold everything in presume there is some money left and you bought the S&P 500 and you would get 14% on average of the last 10 years much much better than running Ford so after 100 years of running Ford in managing Ford and innovating in a 5% margin terrible and negatives I get that they're young companies are not making any profit yet just said 12% still there not focused on profits are focused on growth and building factories where that I can so that number is going to go up and this number is going to grab substantially Fort number probably not going to go up all that much revenue growth for growing under 5% a year newer is going about 40% of year Tesla 30% yeah but can you start to see why growth matters is Appleton person with the with the the property there is is really kind of Spanish frozen 2 of thinking that really doesn't make much sense so forward is I think in an investor business unless you want to rely on ankle Sam bailing them out and you could just say well yeah they could do an extra 100 billion debt on top because interest rates are so low and they'll probably make it not really the kind of company I want to investing in in the long run let's see if he's got any more wisdom for us acting as a good point and I'm not accusing his dog move anything I didn't listen to his full video but there is a point there is a lot of content out there in notice on YouTube at all over the media where people are saying you know this is going to go to the marina they certain person on television on CNBC who shouts very loudly and somehow that way it's meant to be better quality information it isn't you need to be smart TV to look at these things yourself you need to do the digging yourself and understand what's going on let me show you too much outside just too kind of Hanover point why you might not want to buy nio I get that you might not want to buy growth stocks I also get that but I also don't get why you would want to buy Ford so this series Ford this is nio now for spin around forever their revenue growth is this it's in a good year one or two or 3% but they also badias repeatedly like a lot right not just because of covoid something they have a lot of badgers it again and again if their liabilities as in the amount of money they owe because they're putting up debt keeps going up a respectable that happens to the revenue growth so their binding update is not related to match they're growing which was kind of scary and they said liabilities that something like 200 billion now look at nio because we haven't got 10 years we can go back that for revenue growth is like 50 60% to 100-percent I'm in those are very very different numbers and the outpost the liabilities to go up but they also have an all cash on on the books which Passion of course come through and through dilution issuing shares but the chat goes on the same Direction That's What You Want when you chat does this appear and goes nowhere and your debt levels keep piling up you know management poor you know your product range is poor you know you're not making good decisions and you can go back with Ford another 10 years old look the same so it's just a company that's basically kept Alive by low interest rates they might perhaps spin-off and Evie business one day and they let the hall IC business going to bankruptcy get rid of all that debt in continue again I wish them all the best I wish certainly the employees there all the best but it's it's a badly rank and it just is and I appreciate some people of the cars and not dissing the cars and just saying managing proud of you it's inconsistent the only thing consistent with Ford is there they're piling up more debt every single yeah where is it with nio it's a different story new has a new product successful they building extremely use a loyalty yes there is spending money they're investing money they are being smart about not manifest everything themselves for the outsourcing of the boring stuff that says capex I like that so if Amelia is the Apple and Ford is you know Nokia and yes nio isn't cheap it isn't evaluations as they are with Tesla in the urine so honoured is one of the most exciting sectors in the world at present because the whole world is basically banning ice cars so these new start-ups on that many of them that actually putting our cars that actually work that driver going up in flames and that have a chance of really making it and many of them that in this stage of you Ne-Yo just told us that deliver 95000 cars this year that's a fairly major milestone they've already delivered more Than 100000 car so getting past that takes away a lot of the big risk items now let me show you something else here and that is how I look at companies so if you go on my patreon you can find lots of discounted cash flow model stay there are lots of them on there and you can see how they work and I teach you also how they work and nio stock price 3767 that's a little bit Polish you don't have to agree with me on that base it on the growth rates that I see I think they are very possible in fact the guidance we just given for next year for next year was 150 to 200000 cars I've got 175000 Cars in here so I'm not completely off for this year I'm actually lower than they're expecting and and there isn't any massive capital expenditure that we don't know about it already they're getting a free factory they getting free land they get him government support and when they do build a factory in the kids out the only thing that has to actually build at the powertrains and the battery components so it isn't it's not a particularly capital intensive business and that's also makes it more of an apple like tech business it doesn't make it a a Ford very capital intensive business with horrible mattessons and lots and lots of get so this is where I look at it when I value a company irana discounted cash flow model made one for Ford I only went forward 5-years cos I just don't know where they're going to do intend away they still going to be around or not and you know the growth last year was 18% this year is projected is not my numbers and it's projections 4% 20-22 there's going to be this sort of miraculous 20% boost perhaps apps with more ease coming out and then analysts expect them to go back to their kind of 1% or 0% growth which is just nothing really and if it is not intend to send so with that where do we get to fair value of just under $10 and I think from my point of view there is a a wee missing appointee and that stab Ford as to demolish virtually entire business to become what is already and then they're sitting on all that debt so that's why I didn't go to smart comparison I like they also knew she was out there who runs value investing channels and I really respect them because that's I think where the greatest part of our money should be and that's also but I teach you guys if you want to check it out and stocks course here is picking good companies with high Arrowe with high free cash flow with big good margins in big modes and Neil is one of those because neither is a growth stock nio isn't there yet I think you could get there yes I think they could but the code is of course a risk so you could just buy Microsoft you know that Returns as an arrow your 45% which is mind-blowing to use the apartment example again here if you bought a $100,000 apartment and it take you $45,000 rent in the first year you have something as good as Microsoft stock and that's kind of like just isn't saying because you're not going to find an apartment if you do tell me a lot of it is always comparing apples and pears just because I'm largely a value investor doesn't mean I don't also look for opportunities to put some percentage of my money into something like Leo and I appreciate there's a risk of crap and smoke with Ford I think there is probably a greater Risk if you got up in smoke but that's just my take on it I love to hear what you think of it I I I do think these guys I've been very entertaining at everything money and I do appreciate what you do everything money but I kind of think they are coming down the Investment thesis a little bit too much and and the intention might be good the attention might just be to drive Preston to build lasting wealth and check out the Masters darts scores here there's a coupon 29% off it's cold as well because that's what I want you to do and I do really really mean that if you're more of an aggressive investor few more account even active Trader you buy and sell stocks more regularly that I would do it with options because it's lower risk it's hire return to get high probability trades you get data you actually get probability on this straight you know what's gonna happen you know what the worst places you can headed and I teach you all of that also in the last OXO check it out and I'd love to know what you think which site are you on ru ru ru leaning on the stock most side or the sky side or do you think you know which side of my own well I am probably slightly in the middle on the whole front I just don't think we should down the things down I think as YouTubers in creative you'll be able to have a responsibility to teach and not just oversimplify I think people are smart I think you are smart but I think you can appreciate and understand a bit more knowledge I don't think you're scared by a spreadsheet so I am not gonna try and make things super super simple so if you want to check out the discounted cash flow model tinsel on at all on the on the patreon you can check it out there's a link below if you sent a day you're also going to join the discord there in the just is a little bit of an entry hurdle so we don't become a read it that's basically my charger 50 cent of the help because I needed I appreciate you watching thank you very much if you do enjoy the video ever so slightly I would appreciate you hitting the subscribe button as well
2021-09-16 14:44
