Friday, 7 June 2024

Why Nio Stock Plunged Thursday

by BD Banks

First-quarter earnings were released today by Chinese electric vehicle (EV) maker Nio (NYSE: NIO). The company lost slightly more than the market anticipated on sales that also disappointed investors. But it isn’t all bad news for investors.

Still, the market reaction led to as much as a 10% drop in Nio’s American depositary shares. As of 11:45 a.m. ET, the stock recovered some of that decline, but was still down by 6.7%. While well off the lows of the year, Nio shares are now down by about 45% in 2024.

Nio’s shipments are surging

Nio reported a first-quarter loss of $0.36 per share from sales of $1.37 billion. Wall Street expected sales of $1.5 billion and a slightly better bottom line, according to FactSet. Vehicle deliveries dropped by 3% year over year, while sales slid by 7%. That highlights the competitive EV environment that has pushed prices lower as EV makers work to maintain, or even gain, market share.

But the more recent sales data is better news for investors. First-quarter deliveries totaled slightly over 30,000 vehicles. However, in just the first two months of the second quarter, Nio has already reported deliveries of 36,164 units. That’s a 20% sequential increase, with another month of shipments still to come.

In the earnings release, Nio CEO William Bin Li pointed to the company’s “premium brand positioning, industry-leading technologies, and innovative ‘chargeable, swappable, upgradeable’ power experience” as items that have helped Nio gain traction with consumers.

Nio sees shipments of about 55,000 vehicles in the second quarter, with revenue that could nearly double year over year. If it can maintain the momentum it already has shown in the current quarter, today’s dip might look like a good opportunity for long-term investors.

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Howard Smith has positions in Nio. The Motley Fool has positions in and recommends FactSet Research Systems and Nio. The Motley Fool has a disclosure policy.