Early Thursday, Nio posted a far worse-than-expected Q3 loss. But the Chinese luxury EV startup predicted record deliveries and revenue acceleration in Q4 despite Covid-related disruptions. Nio stock jumped, along with other EV makers and the broader market.
"We have witnessed strong growth momentum in user demand and robust foot traffic, especially after the debut of ET5s in stores from September," CEO William Li said in the Nio earnings release.
In a note to clients Thursday, Deutsche Bank analyst Edison Yu said Nio gave a "better-than-feared outlook" following a castings supply issue in Q3 and production shutdowns in October.
Yu added: "This is in line with our 45,000-unit forecast and should alleviate some concerns about the big November-December recovery. The casting supply shortage appears mostly behind and ET5 should at least ramp up close to the original 10,000-unit target in December."
On an earnings call, Nio management said it will launch five new EV models in the first half of 2023, according to local media reports.
Nio says it'll have a total of eight models at that point vs. six currently.
Nio Earnings
Estimates: Analysts polled by FactSet expected Nio to widen net loss per ADR share to 14 cents from a six-cent loss a year ago. Revenue was seen at $1.799 billion.
Results: Nio lost 30 cents per ADR. Q3 revenue grew 33% to $1.83 billion.
Gross margin fell to 13.3%, squeezed by higher battery costs and lower sales of regulatory credits.
Nio recorded $7.2 billion in cash at the end of September, down from $8.1 billion at the end of June.
Outlook: Nio forecast Q4 revenue of RMB 17.368 billion ($2.442 billion) to RMB 19.225 billion ($2.703 billion), jumping 75%-94% vs. a year earlier. That's slightly below consensus.
The Chinese startup expects to deliver 43,000-48,000 EVs in Q4, up 72%-92% vs. a year earlier. It would also be up 36%-52% from Q3's record 31,607 EV deliveries.
NIO Stock, China EV Stocks
Shares of Nio leapt 11.7% to 10.34 on the stock market today. On Wednesday, Nio stock dived 12.4% to 9.25, the worst close in more than two years amid a broad decline for EV stocks. The once-hot China EV startup is mired far below its 52-week high.
Among other China EV startups, Li Auto and XPeng popped 7.6% and 5.5%, respectively, on Thursday, also far below highs. Chinese EV and battery giant BYD gained 4.4%. Tesla, which dominates China's premium EV market, rose 7.4%. Tesla stock skid 7.2% Wednesday to its worst levels in two years.
All benefited from a huge stock market rally following cooler-than-expected inflation data.
China Covid Curbing EV Sales
In Q3, Nio sold a record 31,607 electric vehicles, outpacing its startup rivals Li and Xpeng, but at the low end of its own earlier estimate. It marked a comeback, after Nio lagged those rivals earlier this year.
Nio outsold Li and Xpeng again in October, but its sales fell vs. September. Nio said Nov. 1 that Covid curbs weighed on October production and deliveries.
They also caused the Chinese startup to miss a target for record EV deliveries in each month of Q4.
"All eyes will be on the Q4 delivery outlook given the recent Hefei Covid disruptions hurting October production," Deutsche Bank analyst Yu said in his Nio earnings preview note Tuesday.
Meanwhile, competition is growing in the premium SUV segment. Li recently introduced the L9 premium hybrid SUV. On Thursday, Li began deliveries of the scaled-down L8. XPeng also is bringing more SUV models to market. Tesla recently cut the Model Y price in China.
On Tuesday, BYD said it will launch a new premium car brand in early 2023, called Yangwang, which means "looking up." The electric cars from BYD's new high-end brand are likely to be priced at RMB 800,000 ($110,320) to RMB 1.5 million, according to local media reports.
"While we certainly think some caution is warranted, we don't see Nio as very vulnerable beyond the older models given its strong branding, unique ecosystem (battery swapping), and fresh product portfolio particularly on sedans," Yu added in Tuesday's note.
