Nio Earnings mixed, outlook dim as Tesla China rival ramps up models, markets

The Nio share fell further below key levels on Wednesday morning with Nine (NIO) reports a larger-than-expected loss in the second quarter and weak earnings.


Nio’s EV deliveries increased 14% year-over-year in Q2. They decreased in July and August vs. June, but held over 10,000 in both months.

The once red-hot Chinese electric car startup has seen headwinds mount. These headwinds include new export margins on Nvidia (NVDA), a Nio chip supplier. It also includes fierce new competition and fresh Covid-19 shutdowns in China.

Investors will be keen to learn how Nio weathers persistent supply challenges while pursuing ambitious growth strategies. The emerging Tesla ( TSLA ) rival is launching several new electric cars, expanding overseas and eyeing a mass-market trial.

Nine Earnings

Estimates: Analysts polled by FactSet expect net loss to widen to 16 cents per American Depositary Share from 6 cents a year ago. Revenue grew 8.5% to $1.415 billion, below the low end of Nio’s guidance range for the second quarter.

Results: Nio lost 20 cents a share, while revenue rose 22% to $1.54 billion.

Outlook: Nio sees third-quarter revenue of $1.918 billion-$2.03 billion. Wall Street had expected third-quarter revenue of $2.38 billion, a 55% gain. The electric car manufacturer also sees deliveries in the third quarter of 31,000-33,000. With 20,729 electric cars delivered in July and August already, that means deliveries in September of 10,271-12,271.

Nine Stock

The shares fell 4.4% before opening on the stock exchange today. Nio shares lost 3.5% to 17.11 on Tuesday. The Nio stock faced resistance at the 50-day moving average in late August and remains well below the 200-day average.

Startup rivals Li Auto (LI) and Xpeng (XPEV) fell about 1% early Wednesday after losing more ground Tuesday. Li Auto shares fell to a three-month low, while XPEV shares fell 5.1% to a record low.

China EV giant BID ( BYDDF ) rebounded 0.8% Tuesday, following a four-session dive as Warren Buffett sold a small amount of his large stake. Tesla shares rose 1.6%, back above the 50-day moving average as it battles for support there.

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Nine EV sales, growth strategies

Nio was founded in November 2014 and targets the Chinese market for premium electric cars. As of August, it had produced and sold nearly a quarter of a million electric vehicles cumulatively.

EV sales more than doubled for Nio – and for China overall – in 2021. But the persistent chip shortage and other supply disruptions hit Nio’s production and EV sales earlier this year.

Nio sold 25,059 electric cars in Q2, roughly in line with the top of its delivery guidance. It sold 10,052 EVs in July and 10,677 EVs in August, both below June’s level.

But the EV startup increased deliveries in August compared with the previous month, beating Xpeng and Li Auto, which reported declines.

In July, a shortage of castings hurt production of Nio EVs, including the flagship new ET7 electric sedan. But Nio began delivering the new ES7 SUV on August 28 and plans to launch the smaller ET5 sedan on September 30.

In addition to a growing range of electric cars, Nio plans to expand overseas, sending the luxury ET7 to Europe. It already sells electric cars in Norway and aims to be in 25 countries by 2025.

Various reports suggest that Nio could launch a mass-market EV, challenging the likes of Volkswagen (VWAGY) in China.


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