Okay folks, in this video, I want to talk about where Neo is heading. Let's be real. We've been covering Neo through good and bad at just under four dollars a share a couple years back to over 60 a share earlier this year, and I've even come clean about my romantic relationship with her. We've been through a lot together folks, as Neo is entrenched in the chip shortage, and as we just got their latest earnings yesterday, it's really important that we take some time to actually analyze the direction that Neo is heading.

If you have a position in Neo, or you are considering taking a position in Neo, make sure that you watch this to the end. And of course, the only thing that I ask in return for this video is that you hit that ravishing like button and also don't forget to subscribe either. Okay, so we know that Neo has been trading in a very flat range for the last couple of months, about 40 down from highs just a few short months ago. We know this is partly because of the chip shortage that's affecting all Evs, but it's also because of fear in the growth sector.

So those are two givens that we know about the stock price and why it's trading really low. But what about Neo? The company? How is it doing well? Ev companies have two important metrics: They have production, their ability to produce vehicles, and they have demand. Their ability to sell vehicles. Their level of interest in their vehicles is there demand for a company's product and is their ability to produce a company's product, You could have the best production in the world, but if you don't have any demand, well, you don't have a company, you could have the most demand in the world.

But if you can't get your production together, well, you're not going to be able to make any money. So a very strong measure of proof of concept for any Eevee company is deliveries. Deliveries are literally the amount of demand that a company can deliver on. And sure, there's some speculative Ev companies that don't have any production capacity yet, but have a lot of demand and those are a lot more hard to value.

But with Neo, we actually have proof of concept because we have deliveries and we have years of deliveries to analyze. so let's go ahead and do that. So let's go back to July 2018. Neo delivers 381 vehicles of their first model.

company at the time was just starting to get their feet wet as one of the pioneers of the luxury Ev market in China. Then, several months later, September 2018, Neo delivers 1766 vehicles, which is roughly five times what they had delivered earlier In July also happens to be the month that Neo went public in the Us and jumped up to 13 a share, but the financial media said, don't trust Neo, they're not going to be able to deliver in 2019. November 2018, Neo delivers 3089 vehicles, a sizable jump from the 1766 just a couple months earlier. But Neo stock price gets cut in half because the analysts continue to cast doubt on Neo's ability to produce the next year.

And it turns out the analysts were right. they weren't able to maintain that level of production Throughout the beginning of 2019, Neo had sporadic months of stumbling deliveries. For example, in December 2018, Neo had 3 300 deliveries, Then that went down dramatically in January 2019, then again in February, and it pretty much bounced around back and forth for the next couple of months as well. And so the media was right.

Neo wasn't able to maintain those delivery numbers on a month-by-month basis. But what they missed was the longer term context. The trend. What was Neo doing on a quarter by quarter basis? The thing is, and why Neo was so hated in 2019 was because the analysts were too short-sighted Individual months, especially in an early stage company, can be impacted by so many different factors.

A little bit of a production hiccup can tank a month of sales. There's just so many emerging factors that one month doesn't mean anything for a trend. But what happens when you start looking at quarters? Well, Q2 of 2019, Neo reports a terrible 3553 deliveries underperforming even the last quarter of 2018.. Q3 of 2019, Neo increases the bar a bit with 4 799 deliveries.

Q4 of 2019, Neo reports 8 224 deliveries, which is quite the surge. But at that time, despite them starting to get on the right foot, Neos share price plummets all the way down to two five. That's two dollars and fifty cents, not twenty five dollars heading into 2020. What do the analysts say? Well, the average analyst says, hey, don't trust Nia.

We told you about this in 2018 and 2019. This is a sketchy Chinese company. They're not worth a single dollar per share. Yet again, the analysts were short-sighted in 2019.

What did Neo do? Sure, they had some bad deliveries month over month, but they did get themselves on the right track delivering more deliveries each quarter than the previous quarter. Neo used its struggles in 2019 to streamline the manufacturing process, build its reputation, increase its operational efficiency, and decrease its loss from operations. They launched a successful protocol to start scaling up their operations that year that analysts bagged on Neo that they actually built what made analysts love them just a year later. Anyways, Boom, coveted hits, and that tanks Q1 of 2020..

Factors are: shut down. the Chinese government imposes draconian measures. You know the story. But this drastic drop in deliveries hides the fact that Neo has actually built up a very strong production capacity.

It's just being held down by the virus. Nonetheless, Neo stock price gets cut in half, despite it already being in the single digit range. But then what happens? Well, Q2 of 2020, Neo gets right back to work reporting the best quarter for delivery numbers in the company's history at 10 000. and of course, a drastic jump over the previous month because Covet totally beat down their operations in the first quarter of 2020..

people finally start warming up to Neo and realizing that the trend is real and they're establishing themselves in that market. So within a few quarters, Neo stock price goes from three dollars to 25, then even further to cap off the year. And then in 2020's Q4 report, Neo reports 17 363 deliveries, a massive and drastic jump over just the previous quarter. This finally provides the proof of concept that Neo is emerging as one of the leaders in the massive Chinese Ev market, earning it a price all the way up to highs at 66.99 early in 2021.

But then what happens? Well, crisis hits again. There's a massive chip shortage. Analysts start downgrading Neo because they're worried about short-term deliveries and production, then the rest of tax sells off, grabbing money from Neo share price at all angles, and once again, similar to the last crisis, cutting Neo's stock price in half. And just yesterday, Neo reported 20 060 deliveries for Q1 of 2021, which is more than the previous quarter, and they are expecting a continued increase despite the chip shortage.

somewhere along the lines of 21 000 and 22 000 for the next quarter. And while this is still growth, it's notably a deceleration of growth. And that's because of the chip shortage. But you're starting to see a lot of analysts start downgrading Neo permanently on these lower levels of production.

But what is actually happening? Well, once again, the analysts and a lot of investors are being very short-sighted now. Obviously, there's a lot of different factors that's going into Neo's lower valuation. For example, there's fud in the growth sector, so that's a factor. There's also fun in anything that has large exposure to this chip supply chain issue.

But again, this is all very, very short-sighted. Similar to how folks were too focused on the month by month in 2018 and 2019.. people today are actually too focused on the quarter by quarter evaluation. Should be looking for overall trends, not short-term blips caused by crisis like covet or chip shortages or short-term production delays of any costs.

And over the last three years 2018, 2019, and 2020, the overall trend for deliveries was positive. despite many months where you have these huge drops in production and these huge issues including the massive worldwide pandemic fight that each year has managed to be better than the last year in terms of deliveries in 2021, despite the chip shortage, it's already projected to beat 2020. very easily. Actually, if you look at the numbers, what about vehicle margin? I see vehicle margin as a very important metric because that's what the company is scaling.

So let's start with vehicle margin and we'll count backwards. So Q1 of 2021: 21.2 Margin Q4 of 2020 17.2 percent Margin: Q3 of 2020 14.5 percent Q2 of 2020 9.7 Q1 of 2020 Negative: 7.4 percent Of course that's extra bad because of Covid, but even Q4 of 2019 was very negative Negative: Six percent Not a whole lot better. And we did see some slow improvements prior to covered between Q3 and Q4 of 2019. But overall, if you notice the trend of margin, it's overall very positive as Neo worked out their production infrastructure and got better at producing.

And if you look at Neo by many metrics and you look at it quarter over quarter or especially year over year, you can see that almost by every metric, Neo has been getting better and better and better. And they've been able to make more and more. And they've been able to improve the value proposition that they offer customers with each and every single year as well. And they've also introduced some new models, but we're not even going to get into that in this video.

But what about Neo's market? Well, China's projected car sales are projecting 51 Ev growth in China in 2021 alone, and projected to represent one-third of total car sales in 2025.. So the market trend is very clear. There is also a lot of competition in China, right? So how's Neo going to fair? Well, let's take out this graph that I stole from a site called Equal Ocean. So in orange is Neo, in dark Blue is Tesla and then you have the other shades of blue being companies like Lee, Byd and X-pang And the chart represents the blowing up of the Eevee market in China Overall, so far, consistently since the start of 2020, Neo has managed to either keep its percentage of market share or expand on it.

And while it's easy to look at this and say oh, Neo is a small fish here, it's important to note that the market size as a whole is getting dramatically bigger in this picture. And while the market overall has gone substantially bigger, Neo has also substantially increased its own market share. The entire Ev sales market in July 2019 was just under 20k. The market at the end of 2020 was 70k.

So even if Neo had a consistent, just say one percent of the Eevee sales market in China, it would have totally ballooned because the overall market ballooned. But during that same time period, Neo also substantially increased its own market share. And so in summary, if Neo continues to hold or expand on its market share in this booming market market that's projected to grow substantially over the next five years, and as Neo gets better at producing and delivering on that demand, well Neo will prove itself once again. Similar to the other crisis as the Neo has been through, this crisis will just be a short-term blip, so I wouldn't listen too much to the fuddery folks that caps off the video.

Not a whole lot to talk about in the market today. Pretty much another dumpster fire day. We had some short-term strength in our crypto miners Mara and Ryan. As bitcoin bounced, we had some strength in Evs and charging stations.

We'll see what happens next week, and I'll be with you here again on Sunday, talking about some of the latest plays as well as some catalyst plays that should outperform the rest of the market environment. Anyways, let me go ahead and change my shirt for the outro. Anyways, folks that caps off the video if you have any questions, feel free to reach out to us below or join us on Zip Trader Circle. If you're looking to learn how to trade with like access to our private chat and daily morning briefings, I'll put the link to Ziptraderu below.

If you're wondering what broker to trade these stocks on, Well, we like to send new traders over to Weevil. put the link below, but they are a great platform and I think they're worth checking out. Have a great day and I'll see you in the next video.