Well, that is a wrap! Thank you so much for joining InvestorPlace as we covered the Nio (NYSE:NIO) third-quarter earnings call in real time. After the Chinese electric vehicle leader reported record deliveries and estimate-beating revenue, there is a lot to watch. Importantly, NIO stock is likely to remain hot in the coming weeks and months.
Did you miss the event? There is no need to worry. Dive into our top takeaways and news items on NIO stock below!
Latest Updates:
- That's a Wrap!
- Tesla Model Y Launch Will Benefit Nio, Chinese EV Market
- Nio Has 'No Need' for Financing
- Will the 100KWH Battery Pack Improve Competitiveness?
- Nio Says LiDAR Should Help With Its AV Plans
That's a Wrap!
[Tuesday, November 17, 8:41 pm]
Contributed by Sarah Smith
Well, the high-profile quarterly earnings call from Nio is all wrapped up. What do investors need to know about the call? And what’s in store for NIO stock? Here are some of the biggest takeaways:
- Nio did have a truly historic third quarter. It beat on revenue and losses per share estimates, and set new records besides.
- The third quarter was also its best yet for vehicle deliveries, and it plans on 100% year-over-year growth for deliveries in the fourth quarter.
- One of the biggest takeaways is simply how much has changed for Nio. After struggling for financing and living in penny-stock status, Nio has made a real comeback.
- InvestorPlace Markets Analyst Luke Lango thinks NIO stock is on track for $150. The company itself said it has “no need” for financing in the short term.
- Investors also learned tonight that Nio has some big projects in the pipeline, including two sedans that will help it enter a new market.
- Additionally, Nio is looking forward to sharing updates on its next-generational autonomous vehicle platform in 2021. This platform will be incorporated in at least one of its new sedans.
- Nio is also continuing to make progress with its battery-as-a-service and battery-swapping initiatives.
- However, investors may have been looking for more concrete updates. Because the 100 kilowatt hour battery pack will not launch until December, it will not meaningfully contribute to Q4 revenue.
- Additionally, Nio says that these battery advancements will take some time to manifest in improved gross margins, which were of key interest during the Q&A session.
- Lastly, Nio continues to closely track Tesla (NASDAQ:TSLA). In fact, the company wrapped up the earnings call with a reflection of the upcoming launch of the Model Y in China. How will this impact Nio? For now, things seem rosy, but anything could change.
Tesla Model Y Launch Will Benefit Nio, Chinese EV Market
[Tuesday, November 17, 8:33 pm]
Contributed by Sarah Smith
Tesla (NASDAQ:TSLA) has confirmed that it will launch production of the Model Y in the Chinese market. And Nio says this will actually be good for its users.
The way Nio sees it, the more options consumers have, the more potential there is for adoption of electric vehicles. Additionally, Nio cites multiple price cuts that Tesla has made to its vehicles in the Chinese market. It once again dropped the price of its Model 3 by about 10% at the start of October.
Summing it up, Nio says that the real competition is between the Model Y and the Model 3, not necessarily between Tesla and Nio. However, investors are likely paying close attention to the rivalry because of a recent note from Citron Research. In that short-selling report, the firm said that competitively priced Tesla vehicles will continue to take market share from Nio.
For the future, it will be important to watch how things play out. Will the rosy outlook from Nio hold up?
Nio Has 'No Need' for Financing
[Tuesday, November 17, 8:13 pm]
Contributed by Sarah Smith
Nio says that it has “no need” for financing in the short term. During the third-quarter release, the company shared that its current cash position is $3.3 billion.
Will the 100KWH Battery Pack Improve Competitiveness?
[Tuesday, November 17, 8:11 pm]
Contributed by Thomas Yeung
In the Q&A, Nio management emphasized that their 100kWh battery pack would improve competitiveness. The driving range for its ES8 and ES6 models could increase to 382 miles.
Nio stockholders should celebrate — that’s a far greater range than many gas-driven vehicles.
But don’t bank too much on extended-range batteries — this isn’t going to be a Tesla-killer. That’s because Tesla is also working on similar technology. In June, a Tesla leak showed a 100kWh battery plan for its Model 3 cars, which would increase the car’s range beyond 400 miles. And Tesla already has a 100kWh battery available for Model S cars.
Curb weight has always been an issue for high-capacity batteries. The P100D battery in Tesla’s model X can weigh almost 1,700 pounds. That’s not an easily solvable problem. Even with 37% higher energy density than before, Nio’s batteries will still weigh, quite literally, almost a ton.
Nio Says LiDAR Should Help With Its AV Plans
[Tuesday, November 17, 8:09 pm]
Contributed by Sarah Smith
When evaluating its autonomous future, Nio says the company is considering two things. First, how much time can it save its consumers through rolling out self-driving features? And, how many accidents can it reduce through the same features?
As it considers those two key questions, the company believes that LiDAR will play a role. However, the company must figure out the costs of those sensors and performance.
Investors in the U.S. have been very interested in LiDAR. Just this year we have seen Velodyne Lidar (NASDAQ:VLDR) and Luminar (NASDAQ:GMHI) enter the public market.
Will Nio In-Source Production of Its AV Chip?
[Tuesday, November 17, 8:06 pm]
Contributed by Sarah Smith
Nio says that it is not ready to disclose more information about its next-generation autonomous driving platform, although it will have more updates during its shareholder event in 2021. Importantly, this answer came in response to a question about whether or not Nio will in-source production for its autonomous driving chip.
Deutsche Bank Analyst Edison Yu Joins Q&A
[Tuesday, November 17, 8:03 pm]
Contributed by Sarah Smith
Close followers of Nio stock may be interested to know that Deutsche Bank analyst Edison Yu just asked a series of questions during the Q&A session. Remember, Yu recently released an investor note in response to a short-selling report from Citron Research. Yu had high hopes for the third-quarter earnings call, but his 12-month price target on Nio stock remains at $35. Will he raise it after tonight?
Nio Says New Battery Packs Offer Great Flexibility
[Tuesday, November 17, 8:01 pm]
Contributed by Sarah Smith
The 100 kilowatt hour battery pack and future, larger battery packs should also help improve the popularity of the 70 kilowatt hour battery pack.
How? Nio says that via the new flexibility that comes with its battery-as-a-service model, some consumers will recognize that they only need the 70 kWh pack.
And should their driving needs change, customers will be happy to know they have more comprehensive options. This is particularly important as Nio sees its new business model as a way to please consumers and boost overall EV adoption.
Nio Is Focusing on Sedans, Not SUVs
[Tuesday, November 17, 7:54 pm]
Contributed by Sarah Smith
Nio says that it has a comprehensive plan for its new products. It started with its ES8, then the ES6 and now the EC6. The company says its next steps will be to enter the sedan market, following its historical trajectory of entering different size markets for its vehicles.
Importantly, this comes in response to investor interest in new electric SUVs or other large vehicles. Nio says that instead of focusing on these larger products, it will continue its strategic plan toward smaller-size vehicles.
Will Nio Produce Its Own Cars?
[Tuesday, November 17, 7:48 pm]
Contributed by Thomas Yeung
As Nio ramps up growth in battery swap and charging stations to fuel its growth, investors should start wondering if the company will eventually create its own cars.
Chinese automakers have long relied on joint ventures to produce vehicles — Geely/Volvo (OTCMKTS:VLVLY) and Brilliance/BMW (OTCMKTS:BMWYY) are just a couple among many of these partnerships.
Nio seems set to continue with this pattern of outsourcing production and focusing instead on marketing. But here’s the twist: with its 100kwh battery, the company is now stepping into novel R&D outside of its manufacturing partner’s capabilities. And as the company eyes international markets, it will surely look to produce vehicles in-house to improve margins.
But that could open problems with JAC, Nio’s production partner. It’s a similar story that other Chinese manufacturers have long faced — Geely’s full takeover of Volvo also seems set for regulatory issues.
With Chinese companies caught in a global retreat, Nio’s success in Mainland China looks even more important. Its battery-as-a-service should help differentiate it from Tesla and other competitors.
But longer-term investors should take a lesson from failed Chinese companies like Luckin Coffee: if growth seems too fast, make sure perceived success is rooted in reality.
What Is Included in Q4 Revenue Guidance?
[Tuesday, November 17, 7:46 pm]
Contributed by Sarah Smith
Nio believes that the average selling price of its vehicles in the fourth quarter will be similar to that in the third quarter. Additionally, because it will launch the 100 kilowatt hour battery at the end of the fourth quarter, the company does not anticipate this contributing meaningfully to revenue.
This means that the company’s upbeat guidance doesn’t factor in either of these potential catalysts. Will we see these factors play out in early 2021?
Nio Plans to Optimize Gross Margins in 2021
[Tuesday, November 17, 7:42 pm]
Contributed by Sarah Smith
While Nio admits that quarterly growth in gross margins wasn’t huge (8.4% in Q2 of 2020 to 12.9% in Q3), the company said that it plans to continue optimizing margins in the future as it expands its user base.
Investors should particularly consider how its battery-as-a-service model and other coming advancements play into this. Just as the U.S. is working to build out its EV charging infrastructure, the Chinese market faces its own challenges to wider consumer adoption.
Battery-as-a-Service Should Win New Customers
[Tuesday, November 17, 7:36 pm]
Contributed by Sarah Smith
According to Nio, the initial launch of its battery-as-a-service model has been a success, and the company expects its take rate to continue improving in the long term. Specifically, Nio views the new business model as a way to win over consumers because of the convenience factor. The battery-as-a-service model lowers the initial cost and may help convert a driver from traditional vehicles to the realm of EVs.
2 New Sedans Will Round Out Nio's Portfolio
[Tuesday, November 17, 7:33 pm]
Contributed by Sarah Smith
In addition to the first new sedan utilizing its autonomous platform, Nio also plans to launch a second new sedan. These new models are the company’s top research and development focuses for 2021.
Nio Will Launch A New Sedan With Some Autonomous Capacity In 2021
[Tuesday, November 17, 7:32 pm]
Contributed by Sarah Smith
Nio says the next vehicle it will launch will be a sedan. The company further said that vehicle will use Nio’s autonomous driving platform, in an as-yet-unspecified capacity.
Correlation Between NIO/TSLA Prices Remains Strong
[Tuesday, November 17, 7:28 pm]
Contributed by Thomas Yeung
Investors often ask me what drives Nio stock.
On a day-to-day basis, its share price mirrors Tesla, the U.S. EV maker. No matter what news comes out, NIO tend to follow TSLA closely. Below is a correlation graph between daily returns.
Longer-term returns are even more closely related. On average, NIO has a 64% correlation with TSLA when you look at 10-day returns.
There was a period of low correlation around June, but that’s when both companies traded flat — you would expect correlation to go to zero in those cases.
So, what does that mean for day-traders? When it comes to Nio stock, keep your eye on Tesla news as well.
Earnings Call Turns to Q&A Session
[Tuesday, November 17, 7:28 pm]
Contributed by Sarah Smith
The third-quarter earnings call has now transitioned into the question-and-answer session. This follows remarks from CEO William Li and a refresher of the financial results.
NIO Stock Remains Down in After-Hours Trading
[Tuesday, November 17, 7:26 pm]
Contributed by Sarah Smith
As after-hours trading for the day wraps up, NIO stock remains down. I think it will be interesting to see how tomorrow plays out for the company, and to what extent sky-high expectations will continue to weigh on Nio.
Prep for Second Generation of Battery Swapping
[Tuesday, November 17, 7:16 pm]
Contributed by Sarah Smith
Nio continues to expand its footprint in China, including through its battery-swapping stations. Shareholders got an important update on that technology during the call: CEO William Li said that the second generation of these battery-swapping stations will begin to roll out in the first half of 2021.
Nio Preps to Boost Monthly Production Capacity
[Tuesday, November 17, 7:15 pm]
Contributed by Sarah Smith
Nio says that it plans to improve its supply chain to ultimately increase its production capacity. By January 2021, the company is targeting the ability to produce 7,500 units per month.
100 kWh Battery Deliveries Will Start Next Month
[Tuesday, November 17, 7:14 pm]
Contributed by Sarah Smith
Nio also confirmed during the third-quarter earnings call that it will start deliveries of its 100 kilowatt hour battery system in December 2020. This will also come along with the rollout of its battery subscription services for new customers.
Nio Plans to Announce Autonomous Updates in 2021
[Tuesday, November 17, 7:13 pm]
Contributed by Sarah Smith
Nio says that during its next shareholder event, investors can expect updates on its “industry-leading” platform for autonomous vehicles. The company faces competition in the Chinese self-driving car market from a handful of companies, including Baidu (NASDAQ:BIDU).
Nio Reports Positive Cash Flow From Operations
[Tuesday, November 17, 7:10 pm]
Contributed by Sarah Smith
Nio announced that it has positive cash flow from operations for the second sequential quarter. CEO William Li says the company is hopeful that it will report similar results in Q4, including positive cash flow from operations for the entirety of fiscal 2020.
Nio Finds EV Success in China
[Tuesday, November 17, 7:07 pm]
Contributed by Sarah Smith
CEO William Li says that, over the past 13 months, the ES6 has been one of the best-selling electric vehicles in China. According to the company, this is because of their strong customer following.
Nio, Xpeng and Li Auto: Which Is a Better Buy?
[Tuesday, November 17, 6:06 pm]
Contributed by Thomas Yeung
Tonight, investors will be drawing comparisons between Nio and its two Chinese electric SUV rivals: Xpeng (NYSE:XPEV) and Li Auto (NASDAQ:LI)
That’s because both of Nio’s competitors are growing even faster than Nio. When Xpeng reported third-quarter results last Thursday, its stock shot up 25% during after-hours trading after it revealed a 343% revenue increase from 2019. Xpeng is now up 115% for the month.
As for Li Auto stock, shares are up 82%, even though the company had to issue a recall for over 10,000 vehicles earlier in November. Fast growth can cover a multitude of sins.
Nio shares, meanwhile, are up just 68%, despite showing reasonable growth.
A Question of Valuation
Will this pattern continue? Perhaps in the short run. Value-sensitive investors would quickly notice that Nio’s valuation still outstrips its peers. The company is worth $63 billion, or $5.1 million for every car delivered in Q3 (that’s $63 billion divided by 12,200 cars).
How does that compare?
- Nio: $5.1 million per car delivered
- Xpeng: $3.6 million per car delivered
- Li Auto: $3.3 million per car delivered
Even if Nio can accelerate its Q4 sales, it still puts shares at a handsome premium to competitors.
Build vs. Buy
Investors should feel worried. Nio outsources its production to state-owned Jianghuai Automobile Group (JAC). In theory, that should mean a faster ramp-up in output. It’s the same reason why Rivian teamed up with Ford to help with manufacturing — automobile manufacturing takes time to perfect and scale.
Instead, Xpeng and Li Auto, which make their own vehicles, have both moved within striking distance of Nio’s sales. Each now sell over 8,000-plus units per quarter, compared to Nio’s 12,000-plus. Though growth will naturally slow as Xpeng and Li Auto scale up, it leaves them both more in control over their future production.
International Aspirations
With its $63 billion valuation, Nio is now the sixth most valuable auto company behind Tesla, Toyota, VW, Daimler and BYD. That means it is going to need international expansion aspirations to justify its princely price tag — the Chinese market is large, but not infinite.
My colleague, InvestorPlace Markets Analyst Luke Lango, has suggested that international expansion will drive Nio stock seriously higher. And he’s right — no auto company has ever grown to $63 billion (in today’s dollars) without global aspirations. Even Henry Ford took just one year to expand into Canada, opening the door to the rest of the British Empire. Ford’s first overseas sales branch in Paris would open only three years later in 1908.
Can Nio pull this trick too? I’ll be looking for signals in the CEO comments tonight.
What Impact Will High Expectations Have?
[Tuesday, November 17, 5:32 pm]
Contributed by Sarah Smith
Tom, I think you said it best. There really were sky-high expectations heading into the third-quarter report from Nio, and the performance of Xpeng (NYSE:XPEV) is also certainly top of mind.
This really reminds me of what we have seen leading up to other hotly anticipated events. Before the Tesla (NASDAQ:TSLA) Battery Day launch, Tesla stock soared on high expectations. Investors wanted to hear updates on a million-mile battery. Even though Tesla delivered an amazing event with lots of battery innovations and big announcements (including a $25,000 vehicle), we saw the stock dip. The same thing also happened with the October and November events from Apple (NASDAQ:AAPL). Even though the company rolled out four new iPhones and three new computers, investors were hoping for more.
However, in the days following those events, we definitely saw Tesla and Apple trend higher. I think it will be interesting to see what the next few days hold for Nio.
Sky-High Expectations for Nio Stock
[Tuesday, November 17, 5:19 pm]
Contributed by Thomas Yeung
Nio (NYSE:NIO) released its eagerly anticipated Q3 results after the closing bell today. Delivery numbers came in strong, with an 18% increase from the second quarter. Gross margins also turned positive for the first time, hitting a juicy 14.5%. Ford (NYSE:F), by comparison, earns just 12.5% margins.
Investors should have cheered — the company beat both revenue and earnings estimates by a long shot. Yet, share prices sagged 2.5% in after-hours trading, leaving traders asking, “What’s going on?”
Smart traders would know the two reasons.
The first reason is straightforward: After-hours trading tends to be thin. Without enough traders to have “price discovery,” single trades of profit-taking can push stock prices down with no good reason.
The second has to do with Xpeng (NYSE:XPEV), another EV champion. The company, which reported results last week, blew expectations out of the water. Revenues increased 342% from the prior year (compared to Nio’s 146%), and the company surprisingly announced an increase to 135 super-charging stations across 50 cities. Shares jumped 25% in after-hours trading.
What about Nio? Even if Wall Street analysts were too bearish, Main Street investors were surely hoping for even better news from the EV startup, one of the world’s most valuable companies by market capitalization.
What will tomorrow bring for Nio stock? We’ll see tonight. With just 12,000 sales this quarter, the company still has a lot to prove. And with Nio stock investors watching, it’s going to be an exciting ride.
Nio Shares Are Down in After-Hours Trading
[Tuesday, November 17, 4:40 pm]
Contributed by Sarah Smith
Despite the estimate-beating report and upbeat guidance, Nio stock is down in after-hours trading to the tune of 3.57%. This comes after closing out regular trading higher by 2.15%.
100 kWh Battery Comes Into Focus
[Tuesday, November 17, 4:33 pm]
Contributed by Sarah Smith
Unsurprisingly, the recent announcement of the 100 kilowatt hour battery from Nio is in focus as part of the third-quarter earnings report. Nio considers it one of its top accomplishments during the third quarter, citing its moves into a battery-as-a-service business model.
You can read more about the 100 kWh battery and what it means for NIO stock here.
Nio Expects 100% YOY Increase in Deliveries for Q4
[Tuesday, November 17, 4:29 pm]
Contributed by Sarah Smith
Not only did Nio beat out estimates, it thinks that growth can continue. In fact, the company released bold guidance for the fourth quarter of 2020.
The first big news is that the company expects to deliver between 16,500 and 17,000 vehicles in Q4. That would represent more than 100% year-over-year growth.
The second major update is that the company expects as much as 130% year-over-year growth in revenue. This comes with guidance for Q4 revenue of between $921.8 million and $947.9 million.
Nio Sets New Quarterly Record for Deliveries
[Tuesday, November 17, 4:23 pm]
Contributed by Sarah Smith
Nio announced that it delivered 12,206 vehicles during the third quarter. Importantly, this set a new quarterly record for the Chinese electric vehicle company. Here is a model-by-model breakdown:
- Nio delivered 8,6660 ES6s
- It also delivered 3,530 ES8s
- And lastly, Nio delivered 16 EC6s
It’s important to note that deliveries of the EC6, the newest model from Nio, only began in September. The EC6 is a crossover designed to have a more sporty look.
Nio Stock Earnings: What You Need to Know
[Tuesday, November 17, 4:20 pm]
Contributed by Sarah Smith
- Nio reported revenue of $666.6 million, which beat estimates for $655.28 million.
- Revenue for Q3 2020 is a 146.4% improvement from $257 million in the same quarter last year.
- Nio also reported basic and diluted losses per American Depositary Share (ADS) of 14 cents. This result beats Wall Street consensus estimates for losses of 17 cents per share.
- Q3 2020 losses per share are a 60% improvement from losses of 35 cents per share last year.
- Nio also reported an operating losses of 946 million yuan. This is huge improvement from operating losses of 2.4 billion yuan in the same quarter of 2020.
- The net loss came in at 1.05 billion yuan. This is another huge improvement from 2.5 billion yuan in Q3 2019.
Earnings and Revenue Beat Estimates
[Tuesday, November 17, 4:14 pm]
Contributed by Sarah Smith
Nio reported third-quarter revenue of $666.6 million and losses per share of 14 cents. These results beat consensus estimates for revenue of $655.28 million and losses per share of 17 cents.
Nio Stock Closes 2.2% Higher
[Tuesday, November 17, 4:11 pm]
Contributed by Sarah Smith
NIO stock closed out the regular trading day higher by 2.15% ahead of its third-quarter earnings report. Right after the closing bell, it released its unaudited financial results.
The Consensus: What's Wall Street Expecting?
[Tuesday, November 17, 3:12 pm]
Contributed by Sarah Smith
As investors await further earnings information from Nio, it’s important to understand what Wall Street is expecting headed into the call.
Currently, the consensus view is that Nio will report a loss of 17 cents per share on total revenue of $655.28 million. That would be an improvement from its third-quarter 2019 report, when the company reported a 35 cents per share loss on revenue of $257 million.
NIO Stock Could Be Headed for $150
[Tuesday, November 17, 3:05 pm]
Contributed by Sarah Smith
Why? Lango is confident that Nio will deliver on its international expansion plans. Just as Tesla (NASDAQ:TSLA) has expanded its footprint in China and Europe, he thinks Nio can similarly captivate audiences abroad. That should excite investors heading into what could be a record report from the EV company.
Here's What to Watch Out for Ahead of Nio Stock Earnings
[Tuesday, November 17, 3:03 pm]
Contributed by Sarah Smith
The big day for Nio bulls is finally here! And ahead of the third-quarter earnings call, tension is high. Investors want to know just how NIO stock will perform after earnings, and whether or not the company will present a clear path to higher prices.
Importantly, a lot has been happening behind the scenes. Nio has continued to set records and generate headlines, although not all have been positive. For instance, a recent note from short-selling firm Citron Research, which came with a bearish price target of $25 and critical remarks about the future of Nio in the Chinese market, briefly led shares to plunge on Friday.
Besides the Citron note, InvestorPlace rounded up the biggest things for NIO stock investors to keep their eyes on. Here are the top three:
- Deutsche Bank analyst Edison Yu says he expects Nio to report record revenue and profitability tonight. Importantly, Yu has a 12-month price target below the current share price. Will tonight help him change his mind? And will others on Wall Street follow suit?
- Nio has been big on batteries recently. Will we learn more about the company’s 100 kilowatt-hour battery system tonight? And will Nio have more updates on how the expansion of its battery-swapping program is going? Investors will want to know just how meaningful the battery-as-a-service model is for the company.
- Lastly, will Nio make any other big announcements? Some investors are hoping for information about potential new vehicle models, or further insight on European expansion plans. Especially as Tesla (NASDAQ:TSLA) heats up the market, Nio must continue to deliver.
For more, you can read the full list from InvestorPlace.com here.
