The9 Limited (NASDAQ: NCTY) is having an incredibly strong start to the trading session this morning, and for good reason. The company announced that it has established a new joint venture.
As you could imagine, the news proved to be exciting for investors who are sending the stock on a run for the top. Today, we’ll talk about:
- The joint venture announcement;
- what we’re seeing from NCTY stock as a result; and
- what we’ll be watching for ahead.
NCTY Announces Joint Venture News
As mentioned above, The9 Limited is having a strong start to the trading session in the pre-market hours this morning after announcing joint venture news. The news came by way of press release late last night.
According to the release, the company has teamed up with Faraday&Future Inc. The new JV was established to manufacture, market, distribute, and sell electric vehicles in China.
NCTY said that the focus of the JV int he beginning will surround Faraday’s new V9 model. The vehicle is a luxury IAIEV that’s based on the technology and concepts of the FF91, the company’s flagship consumer car model. In the future, the JV will focus on other potential selected car models in China as well.
According to the terms of the Joint Venture agreement, NCTY will make a capital contribution of up to $600 million in three equal installments to the JV. FF will also make contributions including its use right in a piece of land in China for electric cars manufacturing. It will also grant the JV an exclusive license to manufacture, market, distribute and sell FF’s new brand V9 model and other potential cars in China.
The company also said that the ownership of the JV will be split on a 50% basis between FF and The9. However, The9 will control business operations of the JV.
In a statement, Mr. Jun Zhu, CEO at NCTY, had the following to offer:
We are very pleased to see The9, an Internet company with more than a decade of industry experiences, to partner with FF, a high-tech internet smart mobility company to bring high-quality luxury electric vehicles to the Chinese marketplace.
FF has the industry leading product technology and strategy, and a team of world-class top talents and resources. Leveraging the technology capabilities of FF, we believe our alliance with FF provides us with a great opportunity to pursue the fast-growing market of electric vehicles in China. We look forward to a long and successful relationship with FF and we honor this step to diversify our business portfolio as a high-tech Internet company.
The above statement was followed up by YT Jia, Founder and CEO at FF. Here’s what he had to say:
As a California-based ultra-luxury intelligent mobility brand, FF has hundreds of proprietary patents, along with more than 2,000 industry patents in process to be approved, in both China and the United States. We are committed to be part of the future of the Chinese EV mobility market.
Through the establishment of the joint venture, we are able to implement our dual-home-market and dual-brand strategy and achieve our strategic goal of introducing our luxury EV brand in China. This is only the beginning of a series of strategic actions for FF, all designed to support the completion and launch of its “new species” FF 91 EV in 2019, continue development of the mass-market premium model FF 81 in both China and the United States.
We are very grateful for this opportunity as it shows the recognition of FF’s product technology from The9. I believe that FF’s strategic vision and product concept will be perfectly integrated with the Internet and user operation genes of The9 to realize the smooth operation of FF new brand and flagship products in China.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes to The9 Limited, the news proved to be positive.
After all, the new Joint Venture has the potential to yield strong revenue for the company, leading to strong growth in value for investors. So, it’s not surprising that excited investors are pushing the stock on a run for the top.
As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (8:46), NCTY is trading at $4.17 per share after a gain of $1.65 per share or 65.48% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on NCTY. In particular, we’re interested in following the story surrounding the company’s work to bring this joint venture to life as it has the potential to lead to serious growth in revenue and value for investors. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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