NIO falls after Q1 Earnings for Short Term?
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$NIO Inc.(NIO)$ has just announced its Q1 2024 earnings.
Based on facts and figures, it is not looking good.
Comparatively speaking, it fared “better” than its Chinese competitors - $Li Auto(LI)$ and $XPeng Inc.(XPEV)$ .
Q1 2024 Earnings.
Vehicle sales: YoY quarterly sales fell short by 988 EVs, compared to Q1 2023. [Weak]
Total revenues: As a result, revenue fell short by -7.2%, coming in at RMB 9.9 billion. [Weak]
Gross margin: For this quarter, gross margin has improved by +340 bp. Had it remained at previous 1.5%, earning results would have been worse. [Strong]
Net loss: For this quarter, net loss widened by +9.4% to RMB 5.18 billion.[Weak]
Free cash flow (FCF): As of 31 Mar 2024, FCF were RMB45.3 billion (US$6.3 billion). [Strong]
Loss per share (Net & Adjusted) : -RMB 2.57 per share vs -RMB 2.91. [Strong]
My viewpoints: mine only !
NIO’s unstable market base.
China’s weaker-for-longer economy is not encouraging spending.
With the geopolitical pressure “growing” between US and China, old world monies are not flowing into China.
That is the biggest impediment to China’s growth and its equity market.
NIO - Q2 2024 vs Q2 2023 delivery
Yearly Q1 is always contentious period in China. Its major holiday, the Lunar New Year falls in late January or early February and stretches for 2 weeks (of “lost” business).
Sales and delivery usually pick up momentum from Q2 onwards.
Year 2024’s Q1 is no exceptions.
The “good” news is Nio’s Q2 2024 delivery will be a bumper when Nio next report in early September 2024. (see above)
As of end May 2024, Q2 2024 delivery has already exceeded previous year delivery by +53.76%.
“Onvo” Diffusion.
Nio’s diffusion line “Onvo” was officially launched on 15 May 2024.
It’s first model, the L60 is expected to commence delivery from September 2024 onwards.
There is a lot riding on Nio’s foray into budget electric vehicles. It has to succeed.
An important sustainable monthly “high” delivery numbers is the guarantee needed to turn NIO’s valuation around.
Analysts’ Forecast.
Overall, Marketscreener analysts have made the following forecasts.
(1) Income statement.
All else being equal, sales is expected to continue to improve from 2024 onwards.
Equally, operating income and net income will continue to improve - even though it would still be in negative territory.
It is with hope that Onvo will be the magic potion that could help NIO’s profitable turnaround earlier than forecasted.
(2) Earnings per share (EPS).
Earnings (loss) per share is expected to persists for the next 3 years.
Albeit improving numbers.
Hopefully, these numbers will have significant change come Q4 2024 when NIO’s diffusion line EVs starts delivery.
Strangely, I am not that worried about NIO but more of China ? The latter needs to turnaround in order for optimism & demand to flow again.
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Do you think NIO’s Q1 2024 earnings are dismal compared to $Tesla Motors(TSLA)$ ?
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