Nio (NIO) reported a wider-than-expected second-quarter loss early Tuesday, guided up on third-quarter revenue with deliveries rebounding strongly. Nio stock fell solidly Tuesday.
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The troubled Chinese startup’s sales of electric vehicles have gained momentum on the back of new models.
Nio Earnings
Estimates: Analysts expected Nio to widen losses to 41 cents per American depositary share from a net loss of 19 cents a year ago. Revenue was seen falling 15% to $1.257 billion, according to FactSet.
Results: Nio lost 45 cents a share per ADS. Revenue slumped nearly 15% to $1.21 billion, the first revenue decline since Q1 2020, soon after the Covid-19 pandemic started in China.
Outlook: Nio expects third-quarter revenue of $2.61 billion-$2.92 billion. That would be a 45%-50% gain in local currency. Analysts on average have forecast revenue of $2.474 billion, up 38% year over year, FactSet shows.
Nio sees Q3 deliveries of 55,000-57,000 EVs, up 74%-80% vs. a year earlier. That’s up sharply from previously announced Q2 deliveries of 23,250. Nio already delivered 20,462 vehicles in July, so the Q3 forecast implies combined August-September deliveries of 34,538-38,538.
Nio is expected to release August deliveries data on Friday, Sept. 1
Nio Stock
Nio stock fell more than 4% in early Tuesday stock market action. Nio stock rose 1.8% to 11.02 on Monday. But shares have slumped in August ahead of the startup’s Q2 earnings report. The EV stock is back below the 50-day moving average and shows no new buy point so far.
It rallied strongly in June and July amid signs of improving sales. The EV stock has more than halved from its 52-week high, which came last September.
Nio is challenging EV giants Tesla (TSLA) and BYD (BYDDF) in China, along with its startup peers XPeng (XPEV) and Li Auto (LI).
XPeng missed earnings views last week, while Li Auto beat earlier in August.
On Monday, BYD, China’s EV and battery giant, posted near-record Q2 profits on the back of robust deliveries of electric vehicles.
Nio EV Deliveries, Outlook
For Q2, Nio previously reported improving deliveries of electric vehicles. Its EV sales improved further in July.
The startup had suffered from weak sales amid challenging industry conditions and its own execution issues.
After cutting EV prices in mid June, Nio saw sales momentum improve that month and in July.
It largely extended that trend in August with healthy store traffic in the first two weeks of the month, Morgan Stanley analyst Tim Hsiao wrote in an Aug. 23 note.
Tesla set off a China EV price war early this year and made further cuts in August.
Nio’s new ES6 electric SUV will be key to driving growth the rest of 2023, analysts say. They say the startup has improved operational execution while cutting noncore expenditures.
“We think (Nio) stock can finally recapture momentum after being a relative laggard all year,” Deutsche Bank analyst Edison Yu said in an Aug. 14 note. He maintained a buy rating and raised the price target on Nio stock by $4 to $17.
China Economic Slowdown
But the latest news reports suggest the China slowdown is worsening. China’s stock markets soared in early trade Monday, after regulators implemented several stock market and real estate incentive initiatives.
But early enthusiasm waned, with the recent trend in outflows resuming, leaving markets well off their highs. However, Hong Kong and Shanghai markets rallied again on Tuesday.
Many investors had hoped for stronger stimulus measures to stimulate growth. The Chinese economy weakened in July across property investment, retail sales and industrial output.
Among Monday biggest losers, China Evergrande Group plunged nearly 80% on the Hong Kong Stock Exchange, as trading in its shares resumed after 17 months.
One of China’s largest property developers, it filed for bankruptcy protection in the U.S. in July. The company in March had rolled out a plan to restructure about $20 billion of its more than $300 billion in overall debt.
Another of China’s large developers, Country Garden, has also begun to flash warnings signals.
Year to date, Nio stock is up 12%.
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