Shares of Nio (NYSE:NIO) stock are down by over 5% after the Chinese electric vehicle (EV) company reported its first-quarter earnings. During the quarter, Nio’s deliveries fell by 3.2% year-over-year (YOY) to 30,053 vehicles. That compares to the company’s previous guidance for 30,000 vehicles, which was lowered from between 31,000 and 33,000 vehicles.
Vehicle sales make up the majority of Nio’s revenue, which tallied in at $1.37 billion, down by 7.2% YOY. Analysts were expecting $1.44 billion. The company’s Q1 EPS loss of 36 cents also fell short of the estimate for a loss of 33 cents. Net loss tallied in at $718.1 million, which increased by 9.4% YOY.
Despite the bad print, Nio CEO William Li was upbeat:
“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 Stock: Why Are Losses Growing at Nio? And What Comes Next?
As Li stated, EV competition in China is extremely intense and has resulted in price wars, reducing profit margins and profitability in the process. The ongoing property crisis in China has also dampened consumer sentiment, which is especially detrimental for Nio’s luxury vehicles.
In fact, analysts don’t expect the company to report its first year of positive EPS until 2027, when EPS is expected to be 23 cents compared to a loss of 48 cents in 2026.
Nio unveiled its new, lower-priced Onvo brand in May to alleviate this issue. The brand’s first vehicle, the L60 SUV, will start at $30,500, with deliveries expected to start in September. Nio eventually expects to sell at least 10,000 L60s per month, bringing total monthly deliveries to over 20,000 vehicles.
For Q2, Nio has guided for revenue between $2.297 and $2.373 billion, implying yearly growth between 89.1% and 95.3%. That came above the analyst estimate for $2.053 billion. Deliveries are expected to be between 54,000 and 56,000 vehicles, implying growth between 129.6% and 138.1%.
Nio delivered 36,164 vehicles in April and May, which means that it must deliver at least 18,836 vehicles in June in order to meet the midpoint of its delivery guidance.
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.
