The Stock of Nio Falls After Losses Widen and Revenue Falls More Than Expected

Shares of Nio Inc., a China-based electric-vehicle manufacturer, experienced a decline on Tuesday following the release of their second-quarter results, which fell short of expectations. However, the company provided a positive revenue outlook for the current quarter.

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In premarket trading, the stock (NIO, -5.63%) retreated by 4.5%, reaching a six-week low. This performance marked the 12th instance of a one-day post-earnings loss out of the past 15 quarterly reports.

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The company, headquartered in Shanghai, reported a widened net loss for the quarter ending on June 30, amounting to RMB5.79 billion ($798.9 million), or RMB3.70 per American depositary share (ADS). This contrasted with a net loss of RMB2.26 billion, or RMB1.68 per ADS, in the corresponding period of the previous year.

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After accounting for non-recurring items, the adjusted per-ADS losses reached RMB3.28, which missed the FactSet loss consensus of RMB2.96.

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Total revenue experienced a decline of 14.8%, amounting to RMB8.77 billion ($1.21 billion), falling short of the FactSet consensus of RMB9.16 billion.

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Vehicle sales totaling RMB7.19 billion recorded a decrease of 22.1% compared to the preceding first quarter, as well as a 24.9% decrease from the previous year. This decline was primarily attributed to lower average selling prices and reduced delivery volumes.

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While the cost of sales decreased by 3.0%, the gross margin contracted from 13% to 1% over the previous year. This contraction was largely due to increased sales of lower-margin used electric vehicles (EVs).

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Deliveries witnessed a 6.1% decline, amounting to 23,520 vehicles. Notably, the company delivered 20,462 EVs in July, marking a substantial increase of 103.6% compared to the same period last year.

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Chief Executive William Bin Li attributed the dip in performance to a product transition based on the NT2.0 Platform, along with the expansion of their power network and the reinforcement of sales capabilities. He expressed optimism about a robust growth in vehicle deliveries during the second half of 2023.

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Looking ahead to the third quarter, the company anticipated total revenue ranging between RMB18.90 billion and RMB19.52 billion. This forecast represents an increase from the RMB13.00 billion revenue reported a year ago and exceeds the current FactSet consensus of RMB18.03 billion.

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Furthermore, Nio projected deliveries of EVs between 55,000 and 57,000 units for the third quarter, in contrast to the 31,607 EVs delivered during the same period last year.

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Over the past three months leading up to Monday, the company's stock has surged by 43.1%. In comparison, the iShares MSCI China exchange-traded fund (MCHI) declined by 0.1%, and the S&P 500 index (SPX) achieved a gain of 5.4%.

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