NIO Stock Investors Are on Edge Following Earnings Report

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Nio (NYSE:NIO) stock is down by about 30% during the past month. A large portion of this decline can be attributed to the Chinese electric vehicle (EV) company’s second-quarter earnings report, which came in below analyst expectations.

Meanwhile, shares of China’s benchmark CSI 300 Index have fallen by about 6% this month, affecting Chinese equities across the board. However, China recently announced that it would halve its A-shares stamp duty to 0.05% from 0.1% in an effort to support the market. This marks the first stamp duty reduction since 2008.

During Q2, Nio delivered 23,520 vehicles, down by 6% year-over-year (YOY) from 25,059 deliveries. These vehicles were primarily responsible for Nio’s revenue of 8.77 billion yuan, or $1.21 billion, which fell short of the analyst estimate for 9.25 billion yuan.

NIO Stock Investors Are on Edge Following Earnings Report

Nio’s adjusted loss per share of 3.28 yuan, or 45 cents, also fell short of the analyst estimate for a loss of 2.45 yuan per share. Even worse, gross margin was just 1% during Q2 compared to 13% a year ago and 1.5% during Q1 2023. Furthermore, vehicle margin fell to 6.2% from 16.7% in Q2 2022.

“The decrease in vehicle margin from the second quarter of 2022 was mainly attributed to changes in product mix, partially offset by the decreased battery cost per unit,” noted Nio in the report. “The increase in vehicle margin from the first quarter of 2023 was mainly due to decreased promotion discounts for the previous generation of ES8, ES6 and EC6.”

Still, guidance was a bright spot for the company’s earnings. During Q3, deliveries are expected to be between 55,000 and 57,000 vehicles, representing YOY growth between 74% and 80.3%. This guidance is extremely significant, as it signals for over 100% delivery growth compared to Q2. These deliveries are expected to lead to Q3 revenue of between $2.606 billion and $2.692 billion, implying YOY growth between 45.3% and 50.1%.

Nio has also announced that its mobile phone will be released late next month. The phone will serve as a complement to its vehicles and will be loaded with connectivity features.

“Our phone business is not to compete with those phone makers,” said CEO William Li. “Instead, we would like to use the phone as a carrier to provide the best experience for our vehicle users.”

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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