NIO: It's Time To Wake Up

Seekingalpha2023-06-05

SummaryNIO's May 2023 deliveries were disappointing, with the company needing to deliver an average of 29.5K vehicles per month moving forward to meet its 250K target for the year.I assessed that ...

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LateWizard
2023-06-05
LateWizard
Call call call 😂😅
Newbull
2023-06-05
Newbull
Once a future star of Chinese EV, Nio has lost it's credibility with potential investors having continously delivered poor results and missed targets ......indeed time to wake up!!!!

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It needs to slash its target to regain credibility with investors.NIO's price action suggests that investors are right to reflect significant weakness, given its poor execution.However, buyers appeared ready to defend the selloff this week, suggesting a bottom could be in play.NIO Inc.  posted its May deliveries scorecard on June 1, which was a massive disappointment. On the other hand, investors in China's EV leaders, such as Tesla  and BYD Company, have enjoyed their recovery from last year's lows. Even EV upstart Li Auto (LI) has continued to chart its upward trajectory from its October 2022 lows.However, NIO and XPeng  have underperformed in their delivery execution significantly, suggesting the competition could squeeze them out.NIO posted 6.15K deliveries in May 2023, down 7.5% MoM. Management's lofty goal of 250K in deliveries for 2023 looks increasingly unsustainable, with just seven months of the year left. Why? Consider this.NIO's 250K target for FY23 requires the company to deliver an average of about 21K vehicles per month. So guess how many vehicles NIO delivered in the first five months of 2023? Just 43.9K vehicles, with an average of 8.77K vehicles per month.Either CEO William Li and his team overestimated their abilities at the start of 2023, or they really underestimated the competition. As a result, NIO posted a trailing twelve months or TTM deliveries of 128.5K in May, down from last month's 129.4K. So yes, it seems to be getting worse.With NIO needing an average of 29.5K vehicles per month through the end of December 2023, I expect management to face the harsh reality when it reports earnings on June 9. What reality? I highlighted in my previous article that unless we see significant near-term improvement in its deliveries cadence, management could come under tremendous pressure to downgrade its annual target.Hence, I anticipate Li will likely telegraph a slashed target of at least between 30 to 40% from his initial 250K goal for management to still have some credibility moving ahead.That would allow NIO to reach out for a midpoint annual target of about 163K for FY23, representing a 33% YoY increase over FY22. That's still a pretty stretched goal for NIO, but more credible and less unbelievable, allowing investors and Wall Street analysts more clarity to derive NIO's forward estimates.Notwithstanding, NIO still needs to post an average of more than 17K deliveries per month through the end of December 2023 to meet the reduced targets. Little wonder the company is seeing increased urgency on its newly launched ES6, scheduling its launch and deliveries back-to-back, as NIO has little time to lose to bolster its credibility with investors.As a result, I expect analysts' estimates for FY23 and likely FY24 to be taken down substantially, and possibly its ability to turn profitable on adjusted EBIT terms by FY25.Disappointing? Indeed. Li Auto has performed much better, executing well and meeting its target. The company previously forecasted 78.5K deliveries for Q2 and is on track to achieving its target, requiring 25K deliveries in June. BYD Company has also executed well, posting 240.2K NEVs deliveries in May, \"surpassing 1 million NEV units sold for the year.\"BYD has an annual target of 3M units, suggesting that it still needs to ramp up the pace to meet its goal. However, BYD's performance in May indicates that its performance has improved remarkably compared to the 200K YTD average delivery cadence.As for NIO? I think the market is right to reflect weakness, as it broke down decisively from the lows in October 2022 and re-tested April 2023 lows. Could this be the bottom for NIO \"diamond hands,\" as dip buyers returned this week?NIO price chart (weekly) (TradingView)I have watched NIO's price action over the past four weeks as sellers attempted to force a decisive breakdown to new lows this week.However, dip buyers appeared ready to defend the selloff, as a possible bottom could form. While it's still too early to assess whether the buying momentum could improve, it seems like buyers consider the current levels attractive enough to return.I assessed that a speculative buy entry is feasible if the bullish reversal price action is validated (still pending). In addition, the market is likely expecting management to wake up from its slumber (given the battering) and update investors with a more realistic target for the second half of the year. That could level off the recent headwinds, allowing investors more clarity to evaluate management's target in perspective.Rating: Speculative Buy (Revised from Hold).","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":183944773279784,"gmtCreate":1685929558465,"gmtModify":1685929562341,"author":{"id":"3576797853255359","authorId":"3576797853255359","name":"LateWizard","avatar":"https://static.tigerbbs.com/2623f0ebfedf9dedaf6b68dc8fe2f4b8","vip":1,"crmLevel":3,"crmLevelSwitch":1},"htmlText":"Call call call 😂😅","listText":"Call call call 😂😅","text":"Call call call 😂😅","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/183944773279784","repostId":2340729215,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":183935356579952,"gmtCreate":1685927265577,"gmtModify":1685928826538,"author":{"id":"4101367049328400","authorId":"4101367049328400","name":"Newbull","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0},"htmlText":"Once a future star of Chinese EV, Nio has lost it's credibility with potential investors having continously delivered poor results and missed targets&nbsp;......indeed time to wake up!!!!","listText":"Once a future star of Chinese EV, Nio has lost it's credibility with potential investors having continously delivered poor results and missed targets&nbsp;......indeed time to wake up!!!!","text":"Once a future star of Chinese EV, Nio has lost it's credibility with potential investors having continously delivered poor results and missed targets ......indeed time to wake up!!!!","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/183935356579952","repostId":2340729215,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":43,"commentSize":2,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.24.2","shortVersion":"4.24.2","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2340729215"}