Will NIO rise with Q4 2024 earnings?
I used to have high hopes for $NIO Inc.(NIO)$ and its future.
Among the three Chinese EV makers that started around the same time (including $Li Auto(LI)$ & $XPeng Inc.(XPEV)$), NIO seemed the most promising.
NIO's CEO was charismatic and humble. His vision for EV charging was smart: make it as quick as filling up gas.
Drivers could swap empty batteries for full ones in minutes.
But NIO made mistakes with its money:
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Instead of establishing the brand in EU market, the country managers hired are not up to scratch. Since it first appeared in Norway on 30 Sep 2021, NIO is still lagging when it comes to sales compared to $BYD Co., Ltd.(BYDDY)$ - world’s #1 EV maker.
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Instead of focusing on solid-state batteries and autonomous driving, it made a unnecessary mobile phone. It also kept making new EV models too quickly.
This reminded me of $Faraday Future Intelligent Electric Inc.(FFAI)$, a US luxury EV maker - always coming up with fantastic EV’s technical specs but only manufacture 10 EVs a year. A joke !
NIO spent money carelessly, while its competitors were smarter.
Li Auto is profitable business, and XPeng, though unprofitable, is doing way better than NIO.
They have their stock prices to show for. (see below)
Q4 2024 Earnings.
On Fri, 21 Mar 2025, NIO is set to report its Q4 2024 earnings. Honestly I am not that hopeful.
In a twist of fate, market sentiment appears cautiously optimistic.
Good News !
NIO's financial performance in Q4 2024 is expected to show strong revenue growth, with analysts predicting revenue to reach RMB 20.19 billion,.
This would represent a +18% YoY growth and aligns with its guidance for Q4 2024 that was in the range of RMB 19.68 to 20.38 billion.
In terms of EV deliveries, NIO has already reported a record 72,689 EVs delivered in Q4 2024.
Again, this falls within their guidance range of 72,000 to 75,000 EVs and represents a significant +45.25% YoY increase and a +17.52% QoQ increase.
Bad News !
Profitability remains a concern for investors.
This is because the bulk of sales has been contributed by its diffusion line ONVO where profit margin is thinner compared to its premium NIO brand, whose profit margin has been shaved thin in a highly competitive Chinese EV market; amidst a weak Chinese economy that never quite recovered from the effects of a property slum.
Analysts expect NIO to report an earnings per share (EPS) loss of -$0.42 for the quarter.
Furthermore, its widely known that CEO, William Li Bin has announced (in an internal memo) at the start of 2025, that breaking even by 2026 will be the company’s guiding light.
To that end, NIO needs to demonstrate progress is made and on schedule towards this goal in its upcoming earnings report.
Honestly, this misguided company has made too many wrong turns.
If it able to turn over a new leaf, that is a miracle in itself.
Wall Street view of NIO appears mixed but trending positive:
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Stock Performance: NIO's stock has shown recent strength, surging +17% ahead of the earnings report. This rally was partly fueled by Citibank upgrade of Chinese equities to 'Overweight'. Compared to its peers, it is still the ‘weakest’. (see above)
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Valuation: According to some analyses, NIO's stock currently appears Undervalued, suggesting potential upside for investors despite recent market challenges.
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Growth Potential: The broader Chinese EV market is showing impressive growth, with battery electric vehicle (BEV) sales jumping +94% in February 2025. NIO's own February deliveries increased by +62.2% YoY.
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Competitive Landscape: While NIO faces intense competition in domestic China EV market, its focus on the premium segment and introduction of new brands like ONVO and Firefly could help differentiate it from mass-market competitors.
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Options Market Sentiment: The options market is signaling bullish sentiment ahead of NIO’s earnings report, with increased trading volume and positive price movements.
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Analysts’ Overall Ratings. Overall the big US banks have a muted rating for NIO. Only Citibank was optimistic. Majority were “neutral”, with 2 naysayers. (see below)
Summary.
Despite these positive indicators, investors should remain cautious due to:
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NIO's continued financial losses.
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Highly competitive nature of the Chinese EV market.
The upcoming earnings report will be crucial in determining whether NIO can:
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Maintain its growth trajectory.
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While progress towards profitability for every reporting quarter.
NIO overpromised & under-delivered one time too many. A die-hard fan (like myself) have became disillusioned. Until my massive paper-losses turn into profits, only then would I be convinced.
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Do you think NIO will be able to consistently perform every quarter going forward ?
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Do you think NIO’s CEO and Board of Directors should held accountable for its failure to launch?
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