Nio: The Tesla of China spikes after short seller Andrew sees 60 percent upside

Nio Houses, a cross between a coworking space, a cafe, a daycare center, and an event space.Harrison Jacobs/Business Insider

• Shares of Nio, seen as the Tesla of China, will rally to $12, Andrew Left’s Citron Research said in a note on Monday.
• Left recently turned bullish on Tesla, and Monday’s note shows that his optimism about the electric-car industry also applies to Nio. 
• Nio is “not just a car company,” but “a lifestyle and a brand that is ready to disrupt,” the note said.
• Watch Nio trade in real time here.

Shares of Nio, widely seen as the Tesla of China, soared as much as 12% — touching an intraday high of $8.21 — after short seller Andrew Left said he sees a 60% upside for the stock.

The “path to $12 should have little resistance,” Citron Research, Left’s firm, said in a note published Monday. 

“Just like Tesla was not a simple US electric car story, Nio is so much more than just a Chinese electric car story. Nio’s visionary management is revolutionizing the high-end auto industry in China.”

Left turned bullish on Tesla in October, saying the company is “destroying the competition.” His support for Tesla came as a surprise for some because he had filed a lawsuit against the company in September, alleging CEO Elon Musk was trying to burn short sellers like himself.

Monday’s note shows that Left’s bullish views on the electric-car industry also apply to Nio, a Tesla  competitor. According to Citron, the Chinese EV automaker is “not just a car company,” but “a lifestyle and a brand that is ready to disrupt.”

“Nio is a brand that is connecting with a new generation of Chinese consumers by creating a moat of which even Tesla would be envious. The dealerships — called Nio Houses — are not just places to buy cars. They are ‘trendy club’ style spaces where Nio customers and prospects socialize and can utilize a variety of features dedicated to members (e.g., living room, lounge area, library, meeting space, work lab, open kitchen, and discovery area for children).”

Nio went public on the New York Stock Exchange on September 12. The stock gained huge media attention when it nearly doubled on the second day of its initial public offering. Shares fell below the IPO price in October and recovered a bit but are still 30% below their record high set on September 13. 

The four-year-old Chinese EV startup backed by tech giant Tencent has many big-name shareholders. Baillie Gifford & Co, Tesla’s largest investor after Elon Musk, disclosed in October that they owned 85.3 million NIO shares, or an 11% stake in the Chinese car maker. And Vanguard and Morgan Stanley disclosed last week that they purchased 19 million and 12 million shares respectively during the most recent quarter, according to Citron Research.

Nio shares have gained 26% since going public in September.

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