InvestorPlace Roundup: The Rapid Fall of EV Maker Nio

Stocks held relatively steady today despite last night’s formal impeachment inquiry from House Speaker Nancy Pelosi. The anticipated move did not have the same effect on the markets as a single tweet from President Donald Trump tends to.

InvestorPlace Roundup: The Rapid Fall of EV Maker Nio, Trade War Hits QCOM
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In other news, the vaping epidemic and talks of a ban on e-cigarettes in the U.S. pushed Juul’s Kevin Burns out of his position as CEO today. He was replaced by an executive at Altria Group (NYSE:MO).

The tobacco industry is likely to face more fallout as the vaping crisis continues to unfold. Will it effect stocks like Aurora Cannabis (NYSE:ACB) and Phillip Morris (NYSE:PM), too? Time will tell.

In the meantime, here’s what’s trending for InvestorPlace readers so far today.

“Hello? Hello??” Analysts Stood Up By NIO

Nio (NYSE:NIO) stock plunged after the company released abysmal earnings yesterday. What sent investors and analysts into even more of a tizzy, however, was the fact that they actively ignored protocol by cancelling the quarterly post-earnings conference call just hours before it was to take place.

As historically bearish Ian Bezek put it,

“Once a company has earnings calls, it is nearly unprecedented for them to suspend them. Generally, companies only abandon conference calls if M&A activity is imminent, or if the company is on the verge of bankruptcy. Nio’s decision to not hold a conference call looks terrible.”

Actions speak louder than words. Nio’s inaction, in this case, is particularly audible.

Nio was quick to reschedule the call for this morning, but it failed to dim investor anxiety surrounding the rapid pace the company is burning through cash.

Bezek is certain Nio is heading toward bankruptcy. “The outcome is not yet certain,” he wrote, “but with the bonds collapsing in value, there’s little reason to own NIO stock.”

More Trade War Troubles for QCOM

The communications technology sector is feeling the heat of the trade war again. Todd Schriber reminded us that the Chinese market is a highly significant one for Qualcomm (NASDAQ:QCOM) and QCOM stock.

“The company’s fiscal third-quarter results underscore the importance of China to Qualcomm stock,” writes Schriber. “During that quarter, chip sales fell 13%, with some of that decline attributable to the U.S. ban on sales to Huawei.”

Tezcan Gecgil thinks the upcoming 5G revolution will be QCOM’s saving grace, making the stock a solid pick for long-term investors. “On the 5G front, Qualcomm is likely to be a leader, propelling its earnings growth, writes Gecgil.

Wall Street agrees. Gecgil reiterates that “Wall Street believes Qualcomm will play a dominant and early role in 5G, replicating its success with 3G and 4G mobile networks.”

Aurora Stock and Goodwill

Finally, Mark Putrino highlighted the issue regarding the high amount of goodwill and intangible assets Aurora Cannabis counts as part of its valuation.

“Aurora has $3.9 billion of goodwill and intangible assets listed on its balance sheet. The company lists the total amount of its assets at $5.5 billion. This means that goodwill and intangible assets are 70% of its overall valuation! This is an extremely high number. Remember, goodwill only exists on paper and in the minds of the management.”

ACB stock has dropped roughly 20% since the company reported disappointing earnings on Sept. 12.

That’s it for today’s commentary. Please feel free to drop us a note at editor@investorplace.com to let us know what we got right and what we got wrong. Happy investing!


Article printed from InvestorPlace Media, https://investorplace.com/2019/09/investorplace-roundup-the-rapid-fall-of-ev-maker-nio/.

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