Nio Inc – ADR (NYSE: NIO) is falling hard in the market this morning, and for good reason. While investors were waiting on a smash hit earnings report, the company missed the mark, leading to upset investors.
As you could imagine, these upset investors are sending the stock tumbling down. Today, well talk about:
- The companys results;
- what we’re seeing from NIO stock; and
- what we’ll be watching for ahead.
NIO Announces Financial Results
As mentioned above, Nio is having an incredibly rough start to the trading session this morning after announcing its financial results as well as a business update. Unfortunately, the results missed the mark and the update proved to be upsetting. Here’s what we saw from the report:
- Revenue – Revenue proved to be the only positive point on the report. During the quarter, the company generated revenue of 3.4 billion renminbi, topping analyst expectations.
- Losses – Unfortunately, the companys losses didn’t prove to be positive. During the quarter, NIO produced a loss of 3.5 billion renminbi ($520 million). That works out to a loss of $0.49 per share. Analysts expected that the company’s losses would come in at $0.32 per share.
- Vehicle Deliveries – In the fourth quarter, vehicle deliveries came in at just 7,980. Unfortunately, this was far lower than investors wanted to see. Moreover, the company is seeing a serious slowdown in deliveries. In fact, deliveries in January and February were 1,805 and 811 vehicles, respectively.
- Cancelled Factory Plans – Finally, the company said that it will not be building its new factor in Shanghai. The factory was first announced after agreements were signed in 2017 for the project. However, with mounting losses, the company has decided to abandon these plans.
In a statement, William Li, Founder, Chairman and CEO at NIO, had the following to offer:
2018 was a year of important milestones for NIO, and we are pleased to have achieved many goals that we established for the year. During the year, we began deliveries of the ES8, a 7-seater high-performance premium electric SUV, in June and delivered 11,348 ES8s to users in 2018; we successfully completed our initial public offering on the NYSE in September; and we launched our second production model, the ES6, a 5-seater high-performance premium electric SUV, in December.
In the fourth quarter of 2018, with 7,980 vehicles delivered to our users, the ES8 became the best-selling 7-seater SUV model in the premium sector with a MSRP over RMB400,000. As the number of NIO vehicles on the road across the country continues to grow, top-quality service is a competitive distinction and is core to our strategy of delivering a holistic experience that exceeds expectations. We are proud of our dedicated NIO Power and NIO Service teams for their hard work and seamless 24/7 support to users during the past year, especially during the Chinese New Year season, the busiest travel period of the year. Looking to the year ahead, we believe that our user community will continue to grow, and we are excited that we are about to begin deliveries of the ES6 and the 6-seater ES8 variant as we remain focused on continued market penetration through enhanced products and services.
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 Nio, the news proved to be overwhelmingly negative.
Not only did the company report a wider loss than expected, vehicle deliveries are slowing down tremendously and plans to build a new factory are no longer on the table. Unfortunately, the report was filled with bad news!
Considering this, it’s not surprising to see that upset investors are sending the stock tumbling. As is normally the case, our partners at Trade Ideas were the first to alert us to the declines. Currently (8:03), NIO is trading at $8.34 per share after a loss of $1.82 per share or 17.91% 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 NIO. In particular, we’re interested in seeing what the company does to solve the vehicle delivery slowdown issue and provide value to its investors. Nonetheless, we’ll keep a close eye on the news and bring it to you as it breaks!
What Do You Think?
Where do you think NIO is headed? Join the discussion in the comments below!
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