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

August 29, 2023
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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.

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.

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.

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

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.

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.

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).

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.

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.

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.

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.

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%.

Adan Harris
Managing Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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