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January 11, 2021 6 min read
This story originally appeared on Stock News
The electric vehicles market is revving up with the global fleet of such vehicles expanding significantly over the last decade, supported by favorable government policies and technological advances. The sales of EVs are expected to hit 5.4 million in 2023, accounting for 7 percent of global vehicle sales, according to Bloomberg New Energy Finance. This growth will be driven by the launch of new models by automakers in China, North America, and other emerging economies.
Some of the best EV stocks skyrocketed last year, powering many investors’ portfolios to new heights. And the industry is well-positioned for growth this year also. President-elect Joe Biden’s goal of achieving a U.S. 100 percent clean-energy economy, in particular, should help the electric vehicle thrive this year and beyond.
As the tectonic shift from traditional internal combustion engines to electric engines continues this year, some prominent EV players such as Nio Limited (NIO – Get Rating), Tesla, Inc. (TSLA – Get Rating), and Niu Technologies (NIU – Get Rating) have already gained more than 20% year-to-date. We think these stocks should continue to see solid gains in the upcoming months as well.
Founded in 2014, NIO is a designer, manufacturer, and seller of electric vehicles offering five-, six and seven-seater electric SUVs in the People’s Republic of China. The company also manufactures e-powertrains, battery packs, charging solutions, and battery swapping services.
On January 3, NIO provided its fourth quarter 2020 and full-year 2020 delivery results. The company set a monthly record in delivering 7,007 vehicles in December. Moreover, its cumulative deliveries of its ES8, ES6 and EC6 models hit 75,641 vehicles, representing its growing brand recognition, and expanding sales network.
In mid-December, the company announced the completion of an offering of 68 million American depositary shares at $39.00 per ADS. The company plans to use the offering’s proceeds for research and development of new products, service network expansion and for general corporate purposes.
NIO’s revenue increased 146.4% year-over-year to $666.60 million in the third quarter ended September 30, 2020. Its gross profit rose 87.1% sequentially to $86.30 million, while its gross margin increased 452 basis points sequentially to 12.9 percent. NIO’s vehicle sales grew 146.1% from the year-ago value to $628.40 million over this period.
The consensus EPS estimate for the next quarter ending March 31, 2021, represents a 43.5 percent improvement from the year-ago value. Moreover, NIO has an impressive earnings surprise history; the company has beaten consensus EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $721.39 million for the next quarter represents a 268.4% increase over the same period last year. The stock has gained 20.9 percent year-to-date. The stock is also ranked #6 of 122 stocks in the China industry.
Founded in 2003, the world’s best-selling plug-in and battery electric passenger car manufacturer, TSLA, certainly needs no introduction. The company operates internationally, through two segments – Automotive and Energy Generation, and Storage. Despite the impact of the coronavirus pandemic in 2020, the company surpassed the half a million mark in electric cars produced and delivered. Moreover, the company’s Model Y production in Shanghai has commenced, with deliveries expected to begin shortly.
TSLA plans to roll out Tesla Cybertruck, Semi, and Roadster this year. Its electric pickup truck factory, the Gigafactory, is currently under construction and could be ready to build vehicles as soon as May this year. Moreover, last month TSLA was finally added to the S&P 500 Index after five consecutive quarters of profit.
TSLA’s revenue increased 45.3 percent sequentially to $8.77 billion in the third quarter ended September 30, 2020. Its non-GAAP net income increased 155.5 percent year-over-year to $874 million, while its EPS rose 105.4% from the year-ago value to $0.76. Its gross margin rose 253 basis points sequentially to 23.5% in the third quarter, and its free cash flow rose 276% from the year-ago value to $1.40 billion over this period.
The consensus EPS estimate of $0.92 for the current quarter ending December 30, 2020 represents a 124.4% improvement year-over-year. Moreover, TSLA beat the Street’s EPS estimates in three of the trailing four quarters. The consensus revenue estimate of $10.16 billion for the current quarter represents a 37.6 percent growth from the same period last year. The stock has gained 24.7% year-to-date.
TSLA is rated a “Strong Buy” in our POWR Ratings. It holds a straight “A” in Trade Grade, Peer Grade, Buy & Hold Grade, and Industry Rank. It is ranked #1 of 53 stocks in the Auto & Vehicle Manufacturers industry.
Based in the People’s Republic of China, NIU is engaged in designing, manufacturing, and selling smart electric-scooters, scooter accessories, lifestyle accessories, and performance upgrade components such as wheels and brakes. The company offers RQi and TQi series urban commuter electric motorcycles, professional mountain, and road bicycles.
Last week, NIU provided its e-scooter sales volume results for the fourth quarter of 2020. It sold 149,705 e-scooters, representing a 40.9% year-over-year growth. The number of e-scooters sold in the international markets totaled 12,119, representing an increase of 179.6% compared versus the fourth quarter last year. The growth was driven primarily by a recovery in demand and retail network expansion.
In December, NIU entered a partnership with Aurora Mobile Limited to improve efficiency so as to optimize the user experience for its customers. This collaboration will help NIU gain more insight into its users’ needs and hopefully help it maximize value creation.
NIU’s revenue increased 36.7 percent year-over-year to RMB 894.5 million in the third quarter ended September 30, 2020. The company’s e-scooter sales revenues from international markets were RMB 59.6 million, an increase of 35.2 percent, and represented 7.4 percent of total e-scooter revenues globally. Gross profit rose 28.8% from the year-ago value to RMB 145.23 million over this period.
The consensus EPS estimate of $0.06 for the next quarter ending March 31, 2021, indicates a 250 percent improvement year-over-year. The consensus revenue estimate of $79.14 million for the next quarter represents a 137.8 percent increase year-over-year. The stock has gained 26.3 percent year-to-date.
It is no surprise that NIU is rated “Buy” in our POWR Ratings system. It has an “A” for Buy & Hold Grade and Industry Rank, and a “B” for Trade Grade. Among Technology – Hardware stocks, it is ranked 23rd out of 54.
January 11, 2021 6 min read
Opinions expressed by Entrepreneur contributors are their own.
Raising capital has always been a delicate situation for innovative entrepreneurs, but having the sand of a global pandemic thrown into the gears really brought things to a halt. The flow of money immediately froze up, and startup leaders — particularly aspiring businesswomen of color — felt (and still feel) the chill deeply.
Related: Out of $85 Billion in VC Funding Last Year, Only 2.2 Percent Went to Female Founders. And Every Year, Women of Color Get Less Than 1 Percent of Total Funding
Granted, funding can be a blessing and a curse. I’ve done deals and then desperately wished I could give the money back. The investor wanted to make a quick buck and constantly pushed us to make decisions that were bad for the business in the long term. Pandemic or not, it’s vital that startups avoid taking the wrong money or partnering with the wrong people as it can cause far more harm than good.
Despite best intentions
Certain challenges tend to arise repeatedly when entrepreneurs and startup leaders begin raising capital. Common snags include timing, relationship quality and vigilance.
Timing is likely the biggest challenge for raising capital in a startup. Many external macroeconomic factors dictate access to capital. During a recession (or aversion to certain industries), investments can be hard to come by, even for the best teams with rock-solid pitches. Many startups with excellent ideas likely lost their chance in 2020 due to the global health crisis. Many investors, VCs and angels wanted to pause their investments for several months until things calmed down; if startups could not weather this period, they often failed. Having enough runway in your budget to survive downturns can make or break most startups. Many startups have failed that would have survived if they could have just lasted six months longer.
Another challenge is having sufficient quality and breadth of relationships to find the right investment partner who shares the long-term vision for your business. Ideally, they should be interested in how they fit into your Series B, Series C and so forth at the time they invest into your seed or Series A rounds — and not just looking to be involved in only one stage of the company’s growth. To find this type of investor, a founder needs to maintain relationships with a group of potential investors that is both broad in reach and targeted in alignment with the business. Too many seek VC funds too early; those should be reserved for growth-stage startups. For early stage startups, you need to cultivate relationships with angel investors, or even friends and family.
Related: Swiping Right on a New Investor? Do This First
Ultimately, startups will spend more time fundraising than not. It is acutely frustrating for a startup founder to constantly fight to strike a balance between operating the business and fundraising, as the balancing act lasts for quite some time. However, being prepared at all times to give a pitch or investment deck for funding your business is essential and can define your success. It should always be available to present to an investor and should continuously be updated rather than dusted off every couple of years.
Proper preparation prevails
When working to overcome the aforementioned challenges, it’s important to remember that investors are simply human. They can be wrong and make mistakes, just like everyone else. The best investors, naturally, are those who understand your industry and have plenty of experience within it. Entrepreneurs and intrepid startup leaders looking for funding should take these proactive steps.
1. Always be ready to do a deal
Even if you have cash remaining for another year or longer, you never know when things could change or when a once-in-a-lifetime partnership might present itself. One time, an investor approached me who was interested in placing a large investment in my business, InList, but I was unprepared. I had not thought I would be fundraising for another few months. It took me weeks to get a proposal together for him. In hindsight, I should have had my business plan, pitch deck and term sheet updated and ready to send at a moment’s notice.
2. Pitch the right investors
Align potential investors for the stage your business is in and ensure they are as experienced in your industry as possible. If you are early stage, don’t waste your time with VCs. When I first started looking for capital for InList, I pitched too many VCs and angel investors who had no experience in hospitality, entertainment or travel. Rejection is common in seeking investment, but their refusal was for the wrong reasons. They could not wrap their heads around the business model because they had no experience in the space. This was discouraging at first, until I received completely different feedback and interest from potential investors with experience in the industries.
Related: You Can’t Get VC Funding for Your Startup. Now, What?
3. Always be networking
Even during a lockdown, there are ways to cultivate your network online and through introductions from friends. Never stop growing your network, and focus on not only the quality of your network but also its breadth. Even if you know many high-powered businesspeople and investors, you limit yourself if those connections are all within one geographic region (your city, for example) or one niche. Investors operate in small social circles. If one investor in that circle rejects an investment, often the rest follow suit without bothering to investigate the merits of the investment. You can avoid this by pitching investors who have no or little overlap in their circles.
4. Have an emergency runway fund
If you have already raised capital, create a skeleton operating budget that allows you to remain operational with minimal expenses. It’s also smart to have a reserve budget allocated for this contingency. This way, should the market turn unexpectedly, as it did in 2020, you increase your runway and chances of surviving long enough for the right deal to come through.
Regardless of whether you’re actively seeking investment, always keep your business plan and pitch deck updated. Constantly cultivate and develop new and current relationships in the industries where you may find a suitable investor. Also, understand whether the timing is right for your business to seek investment. If not, see if you can wait until the appetite for investment is stronger or if you need to pivot your business.
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Finding funding is typically one of the most challenging parts of starting a new business. The risks versus rewards of investing in new companies can usually have investors worried about jumping in. The responsibility is then on the entrepreneur to make their business idea exciting and attractive enough to warrant investors’ attention.
No matter whether the funding comes from friends, angel investors or venture capital firms, the entrepreneur must have a clear strategy for obtaining this funding. To help, these eight leaders from Young Entrepreneur Council offer some strategies for persuading someone to invest in a new business.
Young Entrepreneur Council members share tips for how to entice business investors.
Photos courtesy of the individual members.
1. Focus On Getting Results
The more business results you have, the easier it is for investors to give you funds to grow your business. So if you’re just starting, I’d advise you to build your product and sell it. For those who have just started selling a software-as-a-service (SaaS) product, consider consulting as an alternative business model to raise funds to improve your product. Don’t hop on the fundraising train before having a decent product with proof that people want to buy it. And finally, remember that as a CEO you’re the chief builder and seller in your company. You sell your products and services to your customers. You sell your company vision to your employees, and you sell passion, riches and self-importance to your investors. – Samuel Thimothy, OneIMS
2. Create A List Of Their Objections
One way to feel more confident and to convince people to invest in your startup is to come up with a list of their objections. Think of all the reasons why they wouldn’t want to invest. Then, go through the list and find answers to their potential objections. Being prepared for possible questions and concerns will help you respond to them well in the moment. They’ll also find your confidence and readiness impressive, which will make them more likely to invest in your business. – Blair Williams, MemberPress
3. Soft Sell Through Networking
When you first start out, it can be daunting to think about the funds you need and how you’re going to get them. But an easy way to start is to soft sell through networking. Networking is a surefire way to get your business out there and let other professionals in your field know about your brand. Networking events are great opportunities to meet other people in your industry, learn tips and introduce your brand to the right people. The right soft-sell pitch can lead you to a deal with investors you otherwise wouldn’t have had. – Stephanie Wells, Formidable Forms
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4. Offer A Stock That Pays Dividends
Offer a stock that pays some dividends so that your investors get cash flow instead of just long-term equity. The immediate rewards, in terms of dividends, and a well-designed package, make the investment much more attractive to your potential investors. Be specific in the amounts invested and projected dividends in your package and be sure to take the time to show sample reports. Investors want to see fail-proof investments with immediate, as well as long-term, returns. – Matthew Capala, Alphametic
5. Be Completely Transparent
Getting investment from friends and family requires complete transparency. You don’t want to ruin relationships with loved ones because an idea didn’t work out the way you planned. I suggest reaching out to friends and family interested in your idea and giving them your pitch. If you get positive feedback, take some time to talk about your company’s status and your future goals. Keep them updated based on a predetermined schedule (weekly, monthly, quarterly) so they can see and understand the status of their investment. – John Brackett, Smash Balloon LLC
6. Approach Government Organizations
Remember to approach government-based organizations that specialize in helping local businesses and small companies grow. They often have connections and resources that can point you in the right direction even if they can’t help you with your specific investment needs. When you get guidance and information from officials whose jobs it is to support the economy, you’re likely to meet the right people and improve your chances of getting funding. – Syed Balkhi, WPBeginner
7. Create A Persuasive Pitch Deck
I can’t emphasize more the importance of presentation. The majority of your success in getting people to invest in your idea depends on the visuals of your presentation. So take enough time to put together a persuasive pitch deck. The focus should be more on the founders and the company, so avoid using text-heavy slides and keep the visual graphics to a minimum. Keeping that in mind, you should have a short presentation version so you can speak for some specified duration and explain your idea and model to potential investors, and the rest depends on how you break down the complex concepts using graphics and charts. Creative skills are a plus, as those angel investors have seen thousands of pitches and intuitively they know the industrial standards. You can also get professional help. – Vikas Agrawal, Infobrandz
8. Start With One Key Seed Investor
As a VC I’ve seen more pitches than I know what to do with. The best strategy for fundraising I’ve seen is to start with your one key seed investor. Focus first on getting a cornerstone investor. Obsess about who they are and what they bring. Then go find them. Once you find that person who can help you open doors and be a reference to you as a human, the fundraising moves along much easier. – Codie Sanchez, Contrarian Thinking & Entourage Effect Capital
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