This entire selloff was pretty much fueled by a few sensationalist headlines such as “Citron Pulls Plug on NIO” along with a price target pulled out of the ass of a non-analyst with a history of making false and misleading statements intended to manipulate the market to his benefit. If you’re unfamiliar with Andrew Left, the name Citron Research probably sounds like something along the lines of a legitimate investment firm when you see it in a headline. It’s really just one guy, with a lengthy track record of lawsuits for baselessly attacking stocks in an attempt to profit off their downfall. He sold NIO at $10 in 2019 and has clearly been fuming over the profits he’s missed in the past months. Keep in mind, this guy has shorted Tesla over and over without any luck, calling its meteoric rise artificial and insustainable, purely driven by hype. Now he’s shorting NIO on the same premise. Calling out the lack of short interest (aka optimism) also fails to corroborate his rationale for the stock falling to $25 – why even include that?
On to his main point, which is that Tesla’s Model Y is expected to move to a starting price of ¥275k (~41k USD), spelling trouble for NIO’s competing ES6 and EC6 (currently starting at ~54k USD each). This ¥275k price projection is based on one Chinese analyst’s report and can essentially be taken with a grain of salt until Tesla says something confirmatory. Additionally, Left is either being incredibly naïve or incredibly disingenuous to assume NIO would roll over and allow itself to be outcompeted by a cheaper car model. This is a Chinese company we’re talking about. Left conveniently failed to make any mention of NIO’s upcoming economy models such as the ES3 and ET5 (the former being less than a year away with an expected price point of ~30k USD), nor did he write at all about NIO’s uniquely lucrative BaaS program or its ventures into fashion, entertainment, formula racing and more. Taking this into account, I don’t think the competition is as steep as Left claims. Tesla’s market share in China has rapidly declined in recent months as native EV companies push it out, going from 21% in August to 10% as of 3 days ago. Left cites NIO’s 3% market share in China as a weakness, omitting the fact that only about a year or so ago, this figure was very close to zero. NIO is years behind Tesla in terms of production capacity; he’s comparing apples to oranges and he knows it.
In conclusion, Andrew Left’s $25 price target is clearly not based on numbers and calculations – it’s based on how much he wanted to profit off this squeeze, which was probably millions. Guy is a scumbag short seller abusing his power to manipulate the market and I hope the SEC takes a close look at him.