April 19, 2024

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NIO earnings miss estimates.  But there is some good news for Tesla and BYD.

NIO earnings miss estimates. But there is some good news for Tesla and BYD.

Second-quarter results from Chinese electric vehicle startup NIO were worse than expected. The stock didn’t take a huge hit in early trading even though the third quarter looks much better.

This is a relief for NIO investors (trading symbol: NIO). It’s good news for Chinese electric vehicle leaders such as Tesla (TSLA) and BYD (1211.Hong Kong) as well.

New on Tuesday mentioned Adjusted loss in the second quarter of 45 cents per share on sales of $1.2 billion. Wall Street had expected a loss per share of about 33 cents per share on sales of $1.3 billion, according to Bloomberg.

The estimated loss aggregated by FactSet was slightly larger at 41 cents per share. Sales estimates were similar. FactSet is an aggregation of five numbers. Bloomberg used nine estimates.

A year ago, NIO reported an adjusted loss of 19 cents per share on sales of $1.5 billion. Sales were down year-over-year due to lower deliveries. NIO delivered about 23,500 units in the second quarter, down from about 25,000 units delivered in the second quarter of 2022.

Announcement – scroll to continue

Gross margin for the second quarter was about 1%, down from 1.5% in the first quarter.

Shrinking margins, wider-than-expected losses, and lower deliveries aren’t great news. But looking ahead, NIO expects to deliver between 55,000 to 57,000 units in the third quarter. Wall Street was looking for nearly 50,000 units.

NIO shares initially rose in early trading Tuesday, but fell about 0.9%.


Standard & Poor’s 500

And


Nasdaq Composite

Futures rose both by about 0.1%.

However, this didn’t fare too well, and the Q3 guidance should help support the stock somewhat on Tuesday. Coming to the earnings, investors had a lot of questions about competition, demand, pricing and the Chinese economy.

NIO answered one question with delivery instructions. It’s returning to growth after a relatively weak quarter of sales. NIO’s increased deliveries are also a small positive for overall electric vehicle demand in China.

In the first seven months of the year, demand for battery electric vehicles rose nearly 25% year-over-year, according to data compiled by Jeff Chung, an analyst at Citi. That’s strong, but August sales are set to be down slightly year-over-year.

Declining sales may be to blame for Chinese electric car makers and Tesla
,

Announcement – scroll to continue

It lowered prices on about 25 models in August.

Investors will have to keep watching sales numbers from other electric vehicle makers in addition to NIO to get a sense of how demand for electric vehicles plays out for the rest of 2023. China is the largest market for new electric vehicles in the world.

Weak sales and pricing affected NIO stock. Going into Tuesday’s trading, shares are down 45% over the past 12 months and about 28% over the past month. the


Standard & Poor’s 500,

For comparison, it has gained about 10% over the past 12 months and lost about 4% over the past month.

Announcement – scroll to continue

Shares of Tesla, the world’s largest maker of battery electric cars, have fallen about 11% over the past month. Shares of BYD, China’s largest maker of battery electric vehicles, have fallen about 18% over the past months.

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NIO management is hosting a conference call at 8 a.m. ET to discuss the results. Analysts and investors will want to hear more about all the issues affecting stocks: deliveries, demand, and the state of the Chinese economy.

Write to Al Root at [email protected]