Nio income worse than feared; China’s Tesla gives weak outlook

No (NEVER) issued a weak sales forecast for the current first quarter early Wednesday after missing earnings and sales estimates for the last quarter of 2022. Nio stock rose in premarket trading.

Alongside a much worse-than-expected fourth-quarter loss, the Chinese premium EV startup reported falling margins, partly due to “losses on purchase commitments.”

Wednesday’s Nio earnings release alluded to growth plans in 2023, including “five new products” based on a next-gen EV 2.0 technology platform, without giving specifics.

Nio also reported 12,157 electric vehicle (EV) deliveries in February, up from 8,506 in January. Meanwhile, an internal review of a short seller report found key claims “unsubstantiated,” he added.

China’s electric vehicle makers are gearing up after last year’s Covid-related supply disruptions.

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Nio revenue

estimates: Analysts polled by FactSet expected Nio to extend losses to 26 cents per ADR share from 17 cents a year ago. Revenue rose 58% year over year to $2.462 billion.

That would be Nio’s first-quarter revenue of $2 billion. It surpassed $1 billion for the first time in the fourth quarter of 2020.

The startup, sometimes referred to as China’s Tesla, has already announced deliveries of 40,052 electric vehicles in the fourth quarter of 2022. That was a far cry from the original forecast of 43,000 to 48,000 EVs due to supply disruptions and operational issues caused by Covid.

Results: Nio lost 44 cents per ADR share on revenue of $2.329 billion.

Both vehicle margin and gross margin declined sharply from the prior-year quarter and from the prior third quarter. Nio cited “inventory de-stocking, accelerated depreciation of manufacturing assets and losses on purchase commitments for the existing generation of ES8, ES6 and EC6” EVs.

Nio reported $6.6 billion in cash and cash equivalents on hand in late December. That was down from $7.2 billion at the end of September.

outlook: For the current first quarter, Nio forecast revenue of $1.584 to $1.674 million. The median of $1.629 billion is well below the FactSet consensus of $2.505 billion.

The startup delivered 31,000-33,000 EV deliveries in a seasonally weak Q1. That would be up 20.3% to 28.1% year over year, but down from the 40,052 EV deliveries in the fourth quarter. With January and February deliveries, this implies March deliveries of 10,337 to 12,337.

In fiscal 2023, Wall Street expects Nio to lose 66 cents a share, up from an estimated 97 cents loss in 2022. Revenue is expected to be 84% next year.

NIO Stock, Chinese EV Stocks

Shares of Nio rose 1.1% to 9.49 in early trading today, below a falling 50-day moving average. After a four-week drop in earnings, Nio stock is back near the two-year lows set in October.

Premium EV peer Li car (LI) is up 5.9% in premarket trading, continuing to recover from its 50-day moving average and Extension of the rally after the result on optimistic delivery and sales forecasts on Monday. XPEV stock is up 4.1% on Wednesday, but it doesn’t stay far above record lows.

Both Li Auto and Xpeng also reported sales gains in February

Ahead of Nio’s gains, investors were expecting a rebound in EV deliveries after a seasonally weak current quarter as manufacturing headwinds ease.

After Tesla (TSLA) Price cuts in China, some analysts are warning that EV demand for US-listed Chinese EV startups, notably Nio, could falter XPeng (XPEV). Both have slashed EV prices in the wake of Tesla’s cuts.

Li sold Nio and XPeng in the final quarter of 2022. Then, in a seasonally weak January, all three Chinese EV startups saw annual sales declines.

Li, Nio and XPeng will also report February shipments on Wednesday morning. Weekly EV registration data in China suggests higher monthly sales for all three startups.

Analysts are hoping for a rebound in the second quarter as new models roll out and electric vehicle production ramps up.

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