If you're bullish on neo there's a good chance that you thought their recent performance and q2 earnings report was a cause for celebration. Unfortunately, the market reacted poorly to the seemingly positive news, which has a lot of people wondering what's going on how's it going everyone. I hope you're having a great day. My name is matt and in this video i will be discussing neo's earnings report.

I will explain why i think the stock took a hit and finally, i will be covering why i think this dip will ultimately represent a buying opportunity if you're interested in this type of content join the party by hitting the subscribe button. Don't forget to turn on your notifications, so you don't miss any of the new videos. Alrighty then, let's get started, the ev sector has become incredibly popular and the chinese electric vehicle maker neo has been no exception. There was a lot of anticipation for neo's earnings report, which is why we saw a six percent run up the day before it was released when the earnings announcement was released, the stock shot up over 11, which means that neo was trading just below 16 in pre-market Hours, unfortunately, this bullish gap was short-lived.

In fact, the stock sold off all day and closed below the low of the previous two days. This represented a drop of just over 17. So let's figure out what caused this notable upswing, which was followed by a volatile downturn. The bullish news is pretty easy to track down neo's.

Second quarter loss beat estimates after strong sales results. Chinese electric vehicle maker neo said that its second quarter loss was less than wall street had expected and that its sales in the third quarter are likely to beat expectations as well, if you're a medium to long-term investor. This is exactly the type of headlines and news. You want to be hearing it gets even better, though neo's loss of 16 cents per share beat the prediction of a loss of 26 cents per share neo's.

Second quarter. Revenue of 526 million dollars was above the analyst estimate of 504 million. Both numbers were significant improvements over neo's dismal year ago. Results further evidence that the company is on track after running dangerously low on cash early in 2020..

As of june 30th, neo has cash and cash equivalents of 1.6 billion dollars, so not only is neo seemingly trending in the right direction. It has quite a bit of runway. This bullish trend is even better highlighted in the specifics of their most recent earnings report. As i mentioned before, the total revenues was 526 million dollars.

The quarterly deliveries for the es-8 and es6 were just over 10 000 vehicles. The vehicle margin was 9.7 and the gross margin was 8.4. These last two numbers are huge improvements and i'll explain them more. In just a bit, but before that in the second quarter of 2020, 10 331 vehicles were delivered.

This is quite the improvement compared to 3500 vehicles in the second quarter of 2019 and 3 800 vehicles in the first quarter of 2020. Here you can see how the recent four quarters in general are an improvement upon the prior four quarters. Deliveries are trending upwards, which is a great sign for the bull camp. Vehicle sales increased by 146 percent relative to the second quarter of 2019 and increased by 177 percent relative to the first quarter of 2020..

Neo's vehicle margin was 9.7 compared with a negative 24.1 percent. In the second quarter of 2019 and a negative 7.4 in the first quarter of 2020., the gross margin was 8.4 percent in the most recent quarter, which is compared to a negative 33 in the second quarter of 2019 and a negative 12.2 percent in the first quarter Of 2020., in other words, not only is neo selling more vehicles, but it's actually making more money per vehicle. There's, obviously a lot of information in this earnings report. So, if you're interested, i would highly recommend reading it, but i think it's well summarized right here.

If you really take a look at this table, you'll notice that their sales revenue and gross profit are all trending positively. It's also nice to see that the net loss is getting smaller each quarter, which is definitely saying something given the current state of our world economy. Here's a quote from the ceo of neo, which i found to be pretty reassuring. We achieved a record high quarterly deliveries of es8 and es6 vehicles in total in the second quarter of 2020 and expect to deliver 11 000 to 11 500 vehicles in the third quarter.

As the momentum continues once again, these are great things to be hearing if you're an investor, but it didn't stop there. He also said that the current constraints on the productions will be lifted in the near future, and we are confident that our production capacity can meet the accelerated demand of our models beyond the strong order growth. We are proud to reach a milestone quarter with respect to key financial metrics of the company highlighted with a historically high vehicle gross margin of 9.7 percent, lowest ever operating losses and, more importantly, a positive cash flow from operations. For the first time in our history, we will continue to focus on improving operating efficiencies across the company.

Meanwhile, we stay committed to investing in the technologies and services to provide our users with the best yada yada yada. It doesn't much matter. The key takeaway is that neo is currently kicking ass, which brings up the fair question: why was there so much selling today? This is the daily chart for nioh and i think it does a good job of potentially explaining what happened today, because the earnings report was definitely bullish. Now i know it's not the most exciting reason, but i think we saw this sell-off after seemingly positive news because of good old-fashioned profit.

Taking the all-time high for neo is 16 dollars and 44 cents and in pre-market trading today it was trading just below 16. Whenever a stock is close to all-time highs, it's relatively common to see selling because it serves as a point of resistance. Investors were clearly cashing in their chips at these levels, which is why, in many of my videos, i recommend taking some of your profits off the table whenever the stock is trading close to a resistance point. Based on today's close, i'm going to watch how the stock reacts to the previous resistance of thirteen dollars and fifty cents and fourteen dollars and fifty cents before we test the all-time high.

On the flip side, if you're bullish on neo, i would recommend buying as close to support as possible. As things currently stand, the first major support would come just below 11. If the stock is somehow pushed below that, i would then be looking for a gap fill at 9.38 and even though i don't think it will happen anytime soon or perhaps ever you could always watch the reach target of eight dollars, which has served as resistance on Two different occasions and would also be a bottom gap, fill in the short and medium term. These are the technical levels, i'll personally be watching in more of a long-term view.

New is fundamentally trending in a positive direction, which definitely makes me a member of the boat camp. With that being said, neo is still a speculative company. It's a high risk to high reward play. If you made it this far in the video.

I truly appreciate the support you guys are absolutely amazing and i would love to hear from you if you have a question suggestion or just want to share your opinion on you. Let me know in a comment below my goal is to provide as much value as i can. So if you enjoyed the video, let me know by hitting the like button. If you enjoyed this type of content subscribe to the channel and don't forget to turn on your notifications, thanks for watching and until next time best of luck in the markets, you.