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With a market cap of more than twice that of GAC, how big is NIO's bubble?
As of July 15, 2020, NIO's share was trading at $14 per share with a market cap of over $16.5 billion (about 115.5 billion yuan); meanwhile, the total market cap of Hong Kong-listed GAC Group is HK$64.190 billion (about 57.771 billion yuan). At present, NIO's market cap is already twice that of GAC's.
So, is NIO overrated and how should the model of NIO be understood?
In two worlds with GAC
On the eve of GM's bankruptcy reorganization in 2008, almost all of its car brands fell into huge losses, and the only one that kept growing and maintaining high profits were general finance corporation with non-automotive business. Given the financial situation at the time, Wall Street recommended that GM abandon auto manufacturing and instead focus on general finance, with general finance and the interdependence of auto sales, GM rejected the proposal.