By now, you may have heard about the slowdown in electric vehicle demand. Amid this challenging backdrop, it’s not wise to make hasty trades in the EV segment. China-based automobile manufacturer Nio (NYSE:NIO) appears to be having problems, and Nio stock only deserves a “D” grade right now.
We’re not currently slapping Nio shares with an “F” rating, as the company is set to release its first-quarter 2024 financial results in May. It’s possible that the EV maker might pull off a miraculous, positive earnings surprise. Don’t get your hopes up too high, though — and don’t make any investments that you’ll end up regretting down the road.
Don’t Be Impressed by Nio’s EV Delivery Beat
It’s easy to be led astray if you’re not presented with all the relevant facts. A perfect example of this is Nio’s EV delivery “beat” in 2024’s first quarter.
Nio delivered 30,053 vehicles during that quarter, barely surpassing the company’s target of 30,000 vehicles. This result is less than Nio’s 31,041 vehicles deliveries from the year-earlier quarter.
It’s not really an impressive “beat” as Nio had revised its delivery target to 30,000 from the company’s prior prediction of 31,000 to 33,000 vehicle deliveries. It was only a “beat” because Nio moved the goalposts.
Besides, there’s an alarming trajectory in Nio’s quarterly EV delivery figures. The automaker delivered 55,432 vehicles in the third quarter of 2023, followed by 50,045 vehicles in 2023’s fourth quarter.
It’s a discouraging trend, therefore, when we observe that Nio only delivered 30,053 vehicles in Q1 of 2024.
Considering Nio’s Financial Problems
As we mentioned earlier, EV sales have been slow lately. Along with that, Nio’s EV-manufacturer rivals have been slashing their vehicle prices. Besides, China’s economic recovery hasn’t always been smooth.
Without a doubt, these factors have contributed to Nio’s financial problems. These factors aren’t all Nio’s fault, but they’ve been persistent and could weigh on the EV maker’s top and bottom lines for a while.
Not to be the bearer of bad news, but Nio has delivered one unprofitable quarter after another. Analysts expect the company to continue its income-negative track record in this year’s first quarter. Nio could surprise its critics with Street-beating results, but we won’t make any assumptions about that.
What’s known for certain is that, when compared to the prior quarter, Nio’s fourth-quarter 2023 revenue declined and the company’s net earnings loss widened.
Nio’s full-year net earnings loss widened substantially from -14.4371 billion RMB in 2022 to -20.7198 billion RMB in 2023. Thus, we’ve observed major pain points in Nio’s top-line and bottom-line figures.
Nio Stock: No Need to Invite Trouble Now
Will Nio deliver a huge, positive surprise with its upcoming quarterly financial results? Anything’s possible, so short-selling Nio shares would only invite trouble.
Buying Nio shares would also court problems. The automaker’s delivery figures and financial facts aren’t particularly encouraging. Hence, we’ll keep an eye on Nio stock — but for now, we’re only giving it a “D” grade.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
