China's Nio reported mixed first-quarter results Friday and guided to another big drop in electric vehicle deliveries in the second quarter, but sees a noticeable gain in June kicking off momentum for the rest of the year Nio stock jumped, but not far from 52-week lows.
Nio has been struggling with soft sales, a laggard vs. its startup rivals Li Auto and XPeng.
Therefore, the company's delivery outlook is key. Nio is starting to roll out second-generation versions of its most popular electric SUVs, which were overdue for updates.
But competition in China's electric SUV market, dominated by EV giants Tesla and BYD, is becoming more intense.
Nio Earnings
Estimates: Analysts polled by FactSet expect Nio to widen its net loss per share in the March-ended quarter to 38 cents from 12 cents a year ago. Revenue is seen rising 13% to $1.675 billion, but that would be the weakest in years.
Nio has already disclosed that it sold 31,041 EVs in Q1, lagging Li Auto by a margin, and near the low end of Nio's own forecast for 31,000-33,000 EV deliveries.
Results: Nio lost 36 cents a share adjusted while revenue rose 7.7% to $1.55 billion.
Outlook: Nio sees second-quarter revenue of $1.27 billion to $1.36 billion, down 9%-15% vs. a year earlier. It expects to deliver 23,000-25,000 vehicles in Q2, down 0.2%-8.2% vs. a year earlier and down significantly vs. Q1's 31,041, which was down 22.5% vs. Q4. Since Nio has already reported selling 6,658 EVs in April and 6,155 in May, it essentially guided for June sales to jump to 10,187-12,187, fueled by the totally revamped ES6.
Nio sees ES6 sales alone hitting 10,000 units in July. It still expects overall monthly deliveries topping 20,000 at some point in the second half, though it may have to push back its profitability target from late 2023.
Nio Stock
U.S.-listed shares of Nio fell jumped 7.6% to 8.38 in early Friday stock market action, after initially retreating. Nio stock hit a three-year low of 7 intraday on June 1.
The China EV stock has spent most of 2023 below the falling 10-week moving average. In fact, Nio has spent nearly all of the last two years below the 40-week average.
Battle In Electric SUV Market
Amid big changes to its product lineup, Nio's EV sales fell in March, April and May on a month-over-month basis.
Nio was once dubbed the Tesla of China due to the quality and luxury of its cars. It is now struggling with "both weak demand for its sedans and a major production platform transition for its SUVs," Deutsche Bank analyst Edison Yu wrote in May.
But in late May, a new and improved ES6, based on a second-gen EV platform, hit the road. A similarly updated ES8 should follow in June. Both popular models reportedly saw a sales drop-off as consumers awaited a refresh.
The Nio ES6 has been a bestseller since its 2019 launch. It's a potential growth driver for the rest of 2023 after updates.
But more new models continue to hit the crowded Chinese electric SUV market, with 20 debuting in April alone. Nio's SUVs will compete with Li Auto's hybrid SUVs, as well as upcoming models from BYD's upscale Denza line.
Further, Tesla's Model Y remains very competitively priced, though the U.S. EV giant slightly hiked prices in May after slashing them earlier in 2023.
The Tesla price cuts led to a China EV war.
TSLA stock has surged for 10 straight sessions as of June 8, while BYD is in a buy range.
