Nio gave a disappointing EV delivery outlook early Tuesday while losses for the second quarter were worse than feared. Nio stock fell Tuesday, testing a long-term level of support.
But Li Auto stock spiked amid a broad rally for China stocks on additional stimulus measures.
Nio Phone To Take On New iPhone
On the Nio earnings call, management said deliveries of a Nio phone will begin in late September, according to CnEVPost.com. The report seems to confirm speculation about the EV startup's expansion into the smartphone market. Rumors of a Nio phone have long circulated even as iPhone maker Apple is said to be weighing an Apple electric car.
Apple on Tuesday confirmed a fall event, during which new iPhones are expected.
A new EC6 SUV will also launch in September, completing Nio's transition of its entire EV lineup to a second-gen electric platform.
Further, management said the first model from Nio's new mass-market brand, to be called Alps, will launch in the second half of 2024. The first pilot test car is said to be rolling off the production line. Nio currently targets the premium end of the EV market.
Founded in 2014, the Chinese startup's sleek, technologically advanced electric vehicles have been a hit with younger Chinese consumers ever since it began sales. That suggests a potential opportunity for the upcoming Nio phone, though it may also add risk.
Nio Earnings
Estimates: Analysts expected Nio to widen losses to 41 cents per American depositary share from a net loss of 19 cents a year ago. Revenue was seen falling 15% to $1.257 billion, according to FactSet.
Results: Nio lost 45 cents a share per ADS, worse than feared again. Revenue slumped nearly 15% to $1.21 billion, due to lower deliveries and lower average selling prices. That marked the first revenue decline since Q1 2020, soon after the Covid-19 pandemic started in China. Gross margins fell to 1% from 13% a year ago.
Cash and cash equivalents balance stood at $4.3 billion at the end of the quarter. That was down from $5.5 billion at the end of March.
Outlook: Nio expects third-quarter revenue of $2.61 billion-$2.92 billion. That would be a 45%-50% gain in local currency. It was also above analysts' forecast for Q3 revenue of $2.47 billion, FactSet shows.
Nio guided Q3 deliveries of 55,000-57,000 EVs, up 74%-80% vs. a year earlier. That would be up sharply from Q2 deliveries of 23,520. But it was below Deutsche Bank's forecast for 60,000 units in Q3 "and suggests August-September will, on average, be lower relative to July's 20,462," analysts at the firm said in a note Tuesday.
Nio is expected to release August EV deliveries data on Friday, Sept. 1.
Nio Stock
Nio stock lost more than 1% in Tuesday's stock market action, closing well off session lows. Shares had slumped in August ahead of the startup's Q2 earnings report. They are back below the 50-day moving average but found support at the 200-day average on Tuesday. Nio stock shows no new buy point so far.
The EV stock rallied strongly in June and July amid signs of improving sales. It has more than halved from its 52-week high, which came last September.
Nio is challenging EV giants Tesla and BYD in China, along with its startup peers XPeng and Li Auto.
Li Auto stock, which earns a spot on the IBD 50 list of top growth stocks, soared 7.8% Tuesday. XPeng stock popped almost 4%, extending its recent rally to a fifth straight day.
A new Didi deal could give XPeng more than 100,000 incremental units of volume per year, through access to Didi's network of 19 million ride-sharing customers in China, Deutsche Bank analyst Edison Yu said in a note to clients Tuesday.
On Monday, XPeng had announced a strategic partnership with ride-hailing giant Didi to launch a new car brand. That follows an earlier XPeng strategic pact with Volkswagen to jointly develop electric cars.
XPeng missed earnings views last week, while Li Auto beat earlier in August.
Separately on Monday, BYD posted near-record Q2 profits on robust deliveries of electric vehicles.
Nio EV Deliveries, Outlook
For Q2, Nio previously reported improving deliveries of electric vehicles. Its EV sales improved further in July after price cuts and the launch of new models.
It largely extended that trend in August with healthy store traffic in the first two weeks of the month, Morgan Stanley analyst Tim Hsiao wrote in an Aug. 23 note.
The startup had suffered from weak sales amid challenging industry conditions and its own execution issues.
Tesla set off a China EV price war early this year and made further cuts in August.
Nio's new ES6 electric SUV will be key to driving growth the rest of 2023, analysts say. They say the startup has improved operational execution while cutting noncore expenditures.
"We think (Nio) stock can finally recapture momentum after being a relative laggard all year," Deutsche Bank analyst Edison Yu said in an Aug. 14 note. He maintained a buy rating and raised the price target on Nio stock by $4 to $17.
Futures: What To Do After Bullish Market Move
China Economic Slowdown
But the latest news reports suggest the China slowdown is worsening. China's stock markets soared Monday, after regulators implemented several stock market and real estate incentive initiatives.
But early enthusiasm waned, with the recent trend in outflows resuming, leaving markets well off their highs. However, Hong Kong and Shanghai markets rallied again on Tuesday.
Many investors had hoped for stronger stimulus measures to stimulate growth. The Chinese economy weakened in July across property investment, retail sales and industrial output.
Among Monday biggest losers, China Evergrande Group plunged nearly 80% on the Hong Kong Stock Exchange, as trading in its shares resumed after 17 months.
One of China's largest property developers, it filed for bankruptcy protection in the U.S. in July. The company in March had rolled out a plan to restructure about $20 billion of its more than $300 billion in overall debt.
Another of China's large developers, Country Garden, has also begun to flash warnings signals.
Year to date, Nio stock is up nearly 8%.
