Should You Buy Nio Stock Before the Huge Investor Update?

In its most recently completed quarter, the electric vehicle and driverless technology company Neo reported 112% revenue growth yearover-year. What's more, the company's management team is forecasting the upcoming quarter to deliver 110 to 115,000 units, which would represent growth of between 53 and 60% year-over-year. Chinese EV companies have been proliferating, expanding production aggressively, aiming to take market share in China and in Europe and in emerging economies away from markets that formerly were dominated by the United States and European car manufacturers. NEO is scheduled to report its next quarterly investor update on September 1st, and investors are asking me if they should buy this company before they make that huge investor update. Let's take a deeper dive and answer that question together. >> I want to thank the Mly full for sponsoring this video. Visit f.com/parkev for the 10 best stocks to buy now. >> Over the years, NEO has done an excellent job increasing revenue. I've been following this company for 7 years now, and the company has never had a difficult time increasing revenue. They've invested aggressively in research and development, in launching new brands and new products to measure to gain that revenue growth. My question with the company has always been on profitability, on expenses, on how much they're spending in order to generate that revenue growth. In the most recently updated period, the company generated $14.2 billion in sales. That's up from around $2 billion in 2020. The Chinese government has been favoring its electric vehicle industries and vehicle industries overall. The Chinese government is very very much trying to encourage manufacturers in the country to increase manufacturing and sell their products outside of the United States. As much as the Chinese government tries to talk about how they're trying to tell these companies to limit their competitive dynamics, their actions are suggesting otherwise. The manufacturing total number of units and companies in China has proliferated. It's too much for the Chinese market to absorb. So, a lot of these companies are expanding outside Europe, Latin America, emerging economies in Southeast Asia to try and use up all of that utilization of capacity that they've built up over the years. And I've seen a noticeable turnaround in the company's profitability. This chart here really signifies the success that NEO is having. Its operating profit margin at 8.4% 4% is a dramatic improvement from -48% in the middle of 2023. The recent acceleration in sales growth is really helping the company utilize its capacity and that's proving to be significantly beneficial for overall profitability. Interestingly, the company operates on a battery as a service technology. And I like this idea where Neo, its customers can drive to a charging station and have the battery replaced rather than recharged. And that's an interesting dynamic there, an interesting difference that reduces the time to get yourself going again. One of the things I've talked about with electric vehicles, especially in the United States, one of the reasons why it's failing to gain very much traction is because of how convenient it is, inconvenient it is to charge your vehicles if you need to do it during the daytime or if you don't own your own home and you can charge at your home. If you need to charge at one of these public charging stations, it can take you 15 to 45 minutes to charge your vehicle and get you going again. Whereas, if you have an internal combustion engine vehicle, in 2 or 3 minutes, you can fill up your full tank of gas and be on your way. And to make matters worse, electric vehicles are more expensive than their counterparts. So, in the United States, you're paying a higher price and you're getting more inconvenience. It's not a good formula for success in the United States. But in other parts of the world, especially in China, Europe, and in other regions where gas prices are much higher, especially in Europe, the lure of electric vehicles is much stronger because the difference between how much you're paying to fill up gas in your car compared to how much you have to pay to charge your car. that difference is compelling enough to outweigh the inconvenience and so it's gaining traction in most markets outside of the United States. So, for years I've been warning investors about NEO stock and how it's overvalued and the progress of the company was great to be sure and it had good good ideas and and it was, you know, developing new vehicles, but I warned that the valuation didn't make sense. And hopefully you've been watching those videos and responding effectively, doing your own due diligence and coming to a similar conclusion because over the last 5 years, NEO stock is down 89%. This has been one of those companies where I've consistently warned investors that it was too expensive that you should be avoiding this and one of the companies where I received the most backlash from my viewers for making that ranking. It's been one of the more popular stocks. It's been one of the stocks that's been hyped up by a lot of other YouTubers. I won't mention any names. And so, it's gotten investors really excited and investors are not really looking for objective information about this company. They're just looking for cheerleaders and people to hype it up. And since I haven't been hyping it up, I've just pro been providing my objective analysis. Investors have been disappointed with my coverage of this company. But the valuation is a lot different today than where it was for many, many years since I've been covering the company. It's now trading at a forward price to earnings ratio of just 25. It's the cheapest it's been according to this valuation metric going back a few years. On top of that, the company has comfortably developed its three brand strategy with Envo, Firefly, and Neo, and unit production and unit sales are increasing meaningfully. The management team reiterated its profit expectations for the rest of this year. And as I shared with you earlier, the operating profit margin is demonstrating meaningful and consistent and durable improvement. I also updated my discounted cash flow valuation model to today and revised higher my expectations for how much free cash flow I expect the business will generate. My revisions led to a significant increase in the fair value estimate of this company. I now calculate the business to be worth $9 per share and the current market price is just $4.37. I think this is also a great opportunity for investors to learn a valuable lesson in that you don't need to be super early in investing in a company, right? People were telling me that, well, if you wait for NEO to be in a better position, the price is going to be $50 per share or $100 per share and you're not going to get to buy the company. it'll be too late. Well, it's not too late, right? The share price is actually down since I've been warning investors it's down 88% 89%. There's a lot of investors that have bought this stock at above $40 or around $40 a share thinking that, oh my god, I don't want to miss out on this opportunity. I want to get in now. I want to get in early cuz it's going to go to the moon. And this should be an important lesson to not get ahead of that situation, to not have that fear of missing out, which causes you to overpay for investments, especially speculative investments that have not really proven themselves just yet. So, those that have been patient now have an opportunity to buy NEO stock at a very attractive valuation at just $4.37 when I calculated a fair value at $9. So, for the first time ever since I've been covering NEO, I'm upgrading the stock to a buy. And I did this on August 24th 2026. Now, to answer the question, should you buy it before earnings or after earnings? Well, I will advise my general strategy surrounding the earnings release here, which is to split your purchase in two. Let's say if you're thinking about investing $100 in NEO, split your purchase in two, 50 and 50. Buy $50 worth before the company announces earnings and $50 worth after. That way you reduce your risk of each side. You reduce your risk of missing out and you reduce your downside risk. Hey everyone. So many of you have been asking about my investing strategy, and I'm excited to announce that I've written a book that's available for sale now that describes my six-step invest in investing framework for evaluating stocks. I've added the link in the description below.