Get ready, Nio (NYSE:NIO) stock shareholders. The electric vehicle (EV) company is set to release its self-designed mobile phone in late September. The device does not seek to compete with other mobile phones, but rather complement Nio’s lineup of EVs. Some features of the phone include remotely opening vehicle doors, starting the vehicle externally and activating air-conditioning.
“Our phone business is not to compete with those phone makers,” said founder and CEO William Li. “Instead, we would like to use the phone as a carrier to provide the best experience for our vehicle users.”
The phone will be fully compatible with second generation Nio models, according to Gizmochina. However, some features may not work on first-gen models due to hardware limitations.
NIO Stock: Nio to Release Mobile Phone in Late September
This news has worried some shareholders, who believe that Nio should first and foremost focus on its EV efforts. In addition, the release of the phone comes amid growing net losses.
NIO stock has fallen by about 30% during the past month, which is largely attributed to the company’s disappointing second-quarter earnings. During the quarter, Nio reported revenue of 8.77 billion yuan, or $1.21 billion, which fell short of the analyst estimate for 9.25 billion yuan. Making matters worse, the EV company posted a net loss of 6.06 billion yuan, which more than doubled from the net loss of 2.76 billion yuan a year ago. Total deliveries for the quarter totaled 23,520, down by 6% year-over-year (YOY) from 25,059 deliveries. Gross margins on these vehicles was just 6.2%, reflecting a drastic decline from the gross margin of 16.7% the same time last year.
However, the bright spot from Nio’s earnings was it guidance. For the third quarter, Nio has guided for deliveries between 55,000 and 57,000 vehicles, which would reflect YOY growth between 74% and 80.3%. Total revenue is expected to be between $2.606 billion and $2.692 billion as well, implying YOY growth between 45.3% and 50.1%.
Let’s be clear, shareholders shouldn’t expect the upcoming Nio phone to have a significant effect on revenue. The mobile phone industry is also highly competitive, as echoed by Li. For now, the phone should be viewed as a complementary product to its core vehicle products, which Nio should remain focused on.
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.
