Nio's stock dives as earnings, outlook disappoint despite record deliveries

MW Nio's stock dives as earnings, outlook disappoint despite record deliveries

By Tomi Kilgore

Losses were much wider than expected as R&D and marketing costs rose, and revenue surprisingly fell

The U.S.-listed shares of Nio Inc. took a dive in early Wednesday trading, after the China-based battery electric-vehicle maker reported disappointing third-quarter results, as they missed expectations despite record deliveries.

The company $(NIO)$ also provided a revenue outlook for the current quarter that was below Wall Street forecasts, while deliveries were seen rising to another record.

"Nio brand has firmly secured the top position in China's BEV market for vehicles priced over RMB 300,000 [$42,750], holding more than a 40% market share in the first three quarters of this year," said Nio Founder and Chief Executive William Bin Li.

"Starting next year, our three brands are poised to embark on a robust product cycle, projected to elevate the Company's sales volume to new heights," he added.

The stock sank 2.2% in premarket trading. Through Tuesday, the stock had tumbled 12.3% since the U.S. presidential election, amid uncertainties over what Donald Trump's win might mean for China's EV makers, in terms of potential tariffs.

Net losses for the quarter to Sept. 30 widened to 5.44 billion renminbi ($775.2 million), or RMB2.50 per American depositary share, from RMB4.69 billion, or RMB2.67 per ADS, in the same period a year ago.

Excluding nonrecurring items, the adjusted per-share loss of $2.14 was wider than the FactSet loss consensus of RMB1.73. The margin of the miss was the widest since the fourth-quarter of 2022.

Revenue fell 2.1%, to RMB18.67 billion ($2.66 billion) from RMB19.07 billion, while the FactSet consensus called for a slight increase to RMB19.10 billion.

The bottom- and top-line misses came even after Nio had previously reported "record-breaking" third-quarter deliveries that increased 11.6% from a year ago to 61,855 EVs.

While the cost of sales fell more than revenue, to push gross margin up to 10.7% from 8%, operating expenses increased.

Research and development expenses rose 9.2% to RMB3.32 billion, mainly due to higher labor costs in R&D functions, while selling, general and administrative expenses jumped 13.8% to RMB4.11 billion due to higher labor costs related to sales functions and increased spending on sales and marketing.

Looking ahead, Nio said it expects fourth-quarter deliveries of between 72,000 and 75,000 vehicles, representing an increase of 43.9% to 49.9% from a year ago.

The company also expects fourth-quarter revenue to rise 15% to 19.2% to between RMB19.68 billion ($2.80 billion) and RMB20.38 billion ($2.90 billion), but that's below the current FactSet consensus of RMB22.89 billion.

The stock has tumbled 49% year to date through Tuesday, while the iShares MSCI China ETF MCHI has rallied 17.1% and the S&P 500 index SPX has climbed 24.1%.

-Tomi Kilgore

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November 20, 2024 07:35 ET (12:35 GMT)

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