Li_DanLi_Dan ・ Jun. 7, 2024
Nio Shares Fall 10% Midday following Deeper-than-Expected Q1 Revenue Decline
Despite a 7.2% year-over-year decline in Q1 revenue, Nio expects Q2 revenue to grow around 89.1% to 95.3% and delivery to surge up to 138%, compared with a 3.2% decrease in Q1.

TMTPost -- The American Depositary Receipts (ADRs) of Nio Inc. fell as much as 10% before settling 6.8% lower on Thursday, underperforming the market as the U.S. stock benchmark S&P 500 closed flat. The shares fall came after the Chinese electric vehicle (EV) manufacturer posted deeper-than-expected decline in quarterly revenue.

Credit:Nio

Credit:Nio

Nio reported revenue of RMB9.91 billion (US$1.37 billion) in the quarter ended March 31, 2024, representing a 7.2% year-over-year (YoY) decline. The revenue fell short of analysts estimated US$1.4 billion. The net loss per share of RMB2.39, or US$0.36, also missed Wall Street expectation of US$0.33. Net loss widened 9.4% YoY to RMB51.8 billion, and excluding share-based compensation expenses, the non-GAAP adjusted net loss was RMB49 billion, with a YoY increase of 18.1%.

Nio’s core business vehicle generated RMB8.38 billion with a 9.1% YoY decrease in the March quarter. Nio said the decrease was mainly due to a lower average selling price as a result of user rights adjustments since June 2023, and the decrease in delivery volume. The company’s delivery in the first quarter shed 3.2% YoY to 30,053 vehicles, roughly in line with its guidance that has been lowered in March down from a range between 31,000 to 33,000 units.

The delivery slide in the fist quarter, a traditional off season, highlighted the intense competition in the market that has pushed prices lower as EV makers are fighting for maintaining or even winning market shares. However, Nio showcased effective cost management paid off.

Gross margin in the first quarter was 4.9%, compared with 1.5% a year ago. The automaker mainly attributed its increase of gross margin over the first quarter of 2023 to the increased vehicle margin. Vehicle margin stood at 9.2%, up from 5.1% in the first quarter of 2023. The increase in vehicle margin was mainly due to decreased material cost per unit. The vehicle margin was still less than 11.9% in the fourth quarter of 2023, mainly due to lower average selling price as a result of increased promotion during product transitioning, changes in product mix, and partially offset by the decreased material cost per unit, Nio said.

Citi analyst Jeff Chung noted in a Thursday report that gross profits, as a positive, came in about as he expected. But he added that investors might be concerned that cash balances dropped 29% quarter over quarter (QoQ) to about US$3.4 billion. Nio is expected to use about $3.2 billion to build its business in 2024 and 2025 combined.

In spite of weaker sales and deeper losses weighed by price competition in the first quarter, Nio anticipated the current quarter would see robust growth of delivery, which is set to drive sales higher than expected. Its delivery guidance for the second quarter is between 54,000 and 56,000 units, up 129.6% to 138.1% YoY. Revenue for this quarter is expected to be between RMB16.59 billion and RMB17.14 billion (US$2.3 billion and US$2.37 billion), up around 89.1% to 95.3% YoY, whereas Wall Street is projecting sales of about US$2.1 billion.

Nio announced last Saturday it delivered 20,544 vehicles in May, hitting the monthly record with a substantial YoY increase of 233.8%. The Shanghai-based company accelerated its delivery after it posted a 134.6% YoY increase in April, a month following the monthly delivery reversed a sharp YoY decline of 33% in February. Sequentially, the EV maker maintained double-digit growth as it recorded a 31.5% month-over-month (MoM) increase in delivery in May, compared with a 31.6% increase a month earlier.

“Despite the intensifying market competition, Nio’s premium brand positioning, industry-leading technologies, and innovative ‘chargeable, swappable, upgradeable’ power experience have been recognized for their exceptional competitiveness, leading to solid sequential growth in vehicle deliveries in recent months,” Nio chairman and CEO William Bin Li said.  Li expressed upbeat on new launches, including the 2024 ET7 Executive Edition enhancing Nio’s competitiveness  in the premium sedan market. He underscored new smart EV brand ONVO, along with its inaugural product L60 that was unveiled in May. “With ONVO joining our brand lineup, we are poised to expand into the broader mainstream mass market and embark on the next stage of high-quality growth,” added Li.

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