Electric vehicle investors may decide they want a break from Tesla’s controversial CEO. If so, they can look at upcoming IPO NIO (NYSE: NIO).
Hailed as the Tesla of China, NIO plans to raise $1.8 billion in one of 2018’s largest US IPOs. In June 2018 it began delivering its first electric vehicle (EV), an SUV called the ES8 that retails for $65,000 ($54,000 after subsidies). NIO is reportedly seeking a $15 billion valuation, rare for a company that has generated just $7 million in revenue and racked up $3.3 billion in losses during its short four-year life.
Like Tesla in 2010, NIO is coming public with a steep cash burn and a valuation that hinges on a vehicle with no real track record. Over the last eight years, Tesla helped establish the mass appeal for EVs and proved the viability of a made-to-order, direct-to-consumer sales model (also being used by NIO), and returned almost 1,800% from its IPO (44% annually).
Based on Tesla’s sharp ramp-up in the US, NIO should be able to replicate that trajectory in China, the world’s largest market for EVs. With 17,000 reservations, NIO’s post-IPO revenue potential is far greater than Tesla’s post-IPO revenue.
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Fall IPO Preview
NIO is just one IPO we are highlighting in our upcoming Fall 2018 IPO Preview. Look for the special report in September, available only for IPO Pro subscribers.
