Nio Inc (NIO) Stock: Headed Up On Financial Results

Nio Inc – ADR (NYSE: NIO) is having a great start to the trading session this morning, and for good reason. The company announced its unaudited financial results, and while sales are down, the declines were less than expected. At the same time, a new vehicle model is going to start rolling off of the production line relatively soon. Today, we’ll talk about:

  • The results;
  • what we’re seeing from NIO stock as a result; and
  • what we’ll be watching for ahead.

NIO Reports Unaudited Financial Results

As mentioned above, Nio is having a strong day in the market today after announcing its unaudited financial results for the first quarter. Here’s what we saw from the report:

  • Vehicle Sales – During the first quarter, NIO said that it sold 3,989 ES8s. This figure dropped dramatically from fourth quarter sales of 7,980 as expected. However, sales were well ahead of the 3,268 vehicles that were sold in the third quarter of 2018. While vehicle sales were down, the figure far exceeded the company’s guidance considering subsdidy related headwinds.
  • Revenue – Total revenue came in at RMB 1,631.2 million (US$228.8 million). This figure represented a decrease of 52.5%. RMB 1,535.2 million of this revenue was the result of vehicle sales.
  • Margins – During the quarter, vehicle margins came in at -7.2, falling from the 3.7% margin seen in the fourth quarter. Gross margins came in at -13.4%, falling from 0.4% in the fourth quarter.
  • Losses – Net loss attributable to shareholders came in at RMB2,652 million, decreasing 24.6% from the fourth quarter and 32.8% year over year.

While the financial results weren’t likely the source of excitement, there is one thing that seems to be exciting investors here. That’s the coming launch of a new vehicle. In the report, the company reminded investors that it will be rolling the first ES6 vehicles off of the line relatively soon.

In a statement, William Li, Founder, Chairman and CEO at NIO, had the following to offer:

We delivered 3,989 ES8s, the Company’s high-performance premium electric SUVs, in the first quarter of 2019, followed by 1,124 ES8s in April, bringing our total aggregate deliveries to 16,461 vehicles as of April 30, 2019.

We are excited that in June, as scheduled, our second production model, the ES6, a 5-seater high-performance premium electric SUV, will roll off the production line and the first deliveries to NIO users will begin in the same month. The ES6 received broad-based positive feedback from the recent Shanghai Auto Show, and the early reviews from our ES6 test drive campaign launched in May bode well for continued positive momentum.

We currently have more than 12,000 ES6 pre-orders (refundable deposit orders), among which over 5,000 pre-orders were placed since the Shanghai Auto Show began five and a half weeks ago. We are confident that as more and more new potential users start to experience the ES6 first-hand, the vehicle’s competitive features and price will appeal to a growing number of premium automobile buyers.

The above statement was followed up by Louis T. Hsieh, CFO at NIO. Here’s what he had to say:

Deliveries of the ES8 in the first quarter of 2019 exceeded the Company’s expectation despite headwinds from EV subsidy reductions, slowing macro-economic conditions, increased competition, and seasonal factors around the Chinese New Year holiday period.

Looking ahead to the second quarter, we expect an even more challenging sales environment and anticipate overall sequential demand and deliveries to decrease, as competition continues to accelerate and the general automobile market in China remains muted. Against this backdrop, NIO is focusing on rolling out our ES6 nationwide, and at the same time, improving overall network utilization and operating efficiencies.

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 incredibly positive.

Sure, sales fell, but that was to be expected. Ultimately, vehicle deliveries came in ahead of expectations. Moreover, with the ES6 rolling off of the line in June, investors are excited. So, it’s not surprising to see the stock headed up.

As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (7:52), NIO is trading at $4.06 per share after a gain of $0.20 per share or 5.18% 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 following sales figures as Chinese subsdidies continue to pressure the EV market. We’re also interested in the coming launch of the ES6, if all goes well, this launch could greatly expand the company’s revenues. Nonetheless, we’ll keep a close eye on the story and bring the news to you as it breaks!

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