After spending months in the $2.50 - $3.00 range, China-based electric vehicle maker Nio (NYSE:NIO) shares nearly doubled from to the $6.00 range. Hertz Group (NYSE:HTZ), set to file for bankruptcy, and Luckin Coffee (NASDAQ:LK), which admitted to accounting fraud, also rose. Why?
Nio benefited from a June 3 ‘bullish’ call from Goldman Sachs. It also posted record-high monthly deliveries of 3,436 units in May, up a respectable 215.5% Y/Y. As gross margins rise and losses shrink, investors are betting Nio has better value than Tesla (NASDAQ:TSLA).
Hertz Group will file for bankruptcy, which will wipe out shareholders. The stock’s incredible run from the 40 cent bottom to the $2.70 range last week is silly at best. Speculators do not know that a bankruptcy will value the stock at zero. It will take a while for the stock to get there.
Luckin Coffee admitted to accounting fraud and will get delisted. It appealed the order but is unlikely to win. Speculators are betting the company will win its case. Investors have better China-based stocks to look at Momo, JD.com, Alibaba (NYSE:BABA), and Baidu.
Though BABA and JD stock is the best and most expensive, their long-term prospects are exceptional.
