Investors hoping for news about Covid-19, supply-chain problems, and the state of electric-vehicle demand in China may want to watch the next set of results from NIO.
The EV maker, which typically reports late in an earnings cycle, will disclose its earnings for the first quarter of 2022 on Thursday morning. The stock could use a boost.
Coming into Tuesday trading, shares were down about 39% so far this year, far worse than the 14% and 9% comparable, respective drops of the S&P 500 and Dow Jones Industrial Average. The shares are down more than 70% from their record high of almost $67.
Part of the problem is that rising interest rates and inflation have sapped investors' enthusiasm for richly valued growth stocks.
Wall Street is likely to focus on sales, earnings per share, and the outlook for deliveries for the current quarter. For the first quarter, Wall Street expects about $1.49 billion in sales and a 15-cent loss per American depositary receipt, which would be roughly in line with the numbers from the fourth quarter of 2021, when the company reported $1.55 billion in sales and a loss of about 16 cents per ADR.
First-quarter sales are expected to be roughly flat compared with the previous quarter because of deliveries. NIO delivered about 25,800 vehicles in the first quarter, just higher than the 25,000 it handed over to customers in the fourth quarter of 2021.
At this point, investors probably expect sales to be a little higher than Wall Street has penciled in, given that NIO's rivals Li Auto $(LI)$ and XPeng $(XPEV)$ both beat first-quarter estimates. Li shares rose 4.7% the day following its first-quarter report, while XPeng stock dropped 5.5% after it disclosed its numbers. Investors appeared disappointed with the number of vehicles XPeng forecasted for the second quarter.
XPeng, LI, and NIO typically issue forecasts for quarterly deliveries one quarter ahead. The second quarter of 2022, which has just a couple of weeks left, has been affected by Covid lockdowns in China. Manufacturers have taken downtime and operated at reduced rates, creating parts shortages, while lockdowns have affected sales.
NIO has delivered about 12,100 vehicle, combined, in April and May. Investors likely expect the full second-quarter number to come in at around 20,000 to 22,000 vehicles. That would imply about 8,000 or 10,000 vehicles delivered in June. That guidance would look similar to what XPeng and Li gave, adjusted for the size of each company.
Even though NIO reports after its peers, investors should still brace for some trading volatility. Options markets imply shares will move 10% to 12%, up or down, after earnings. That's more volatility than in recent quarters. NIO stock has moved an average of about 4.5%, up or down, following the past four quarterly reports.
Shares have fallen three of the four times the day following the report even though NIO has beaten sales estimates each time.
NIO management has scheduled a conference call to discuss the results for 8 a.m. Eastern time Thursday morning.