NIO Inc. (NYSE:NIO) is slated to report its results for the second quarter of 2022 on September 7, before the market opens. Despite better-than-projected vehicle deliveries, the chances of this Chinese electric vehicle (EV) maker beating earnings estimates in the quarter look slim.
The $2.6-billion company is one of the leading players in the global electric vehicle market. Its premium vehicle offerings include smart electric SUVs (ES8 and ES6), smart electric coupe SUVs (EC6), and smart electric sedans (ET7).
NIO reported narrower-than-expected losses in three of the last four quarters while posting wider losses in one quarter.
For the to-be-reported quarter, the consensus estimate for the company’s bottom line is a $0.16 loss per American Depository Shares (ADS). The consensus estimate for revenues stands at $1.4 billion. In the first quarter of 2022, the company reported a $0.13 per ADS loss, and its revenues were $1.56 billion.
Factors Influencing NIO’s Q2 Results
Over the past few quarters, NIO has benefited from its technological expertise and focus on innovation. So far this year, the company has upgraded its ES8, EC6, and ES6 models with digital cockpit hardware. Further, it launched NIO ES7, which embraces NIO Technology 2.0. Benefits from product introductions might reflect in the company’s second quarter 2022 results.
However, production and demand restrictions due to the impacts of the pandemic in some cities of China and existing supply-chain bottlenecks might have been headwinds in the second quarter.
Notably, NIO delivered 25,059 vehicles in the second quarter of 2022. Though this number surpasses the company’s expectation of 23,000 to 25,000 deliveries in the second quarter, it falls 2.8% behind the first quarter’s tally of 25,768 vehicles.
It is worth mentioning that the company’s sequential story could be underpinned by its website traffic trend. According to TipRanks’ Website Traffic tool, the total estimated visits to the company’s website decreased 17.7% sequentially in the second quarter of 2022.
For the second quarter, the company forecasts revenues to be within the $1.473-$1.591 billion range.
Also, the high costs of chips, raw materials, and batteries used in the production of electric vehicles might have hurt margins and profitability. Adjustments to the prices of products might have been a support.
Is NIO Stock a Buy, Sell or Hold?
Despite the concerns discussed above, prospective investors could find NIO stock attractive based on its solid long-term prospects. On TipRanks, analysts are unanimously optimistic about NIO stock, which warrants a Strong Buy consensus rating based on 11 Buys.
Also, NIO’s average price target of $32.44 suggests 82.97% upside potential from the current level. Shares of NIO are down 47% year-to-date.
In June 2022, the company’s Founder, Chairman, and CEO, William Bin Li, opined that the company was making “decisive investments in new products, technologies, and businesses.” Also, it is working to optimize its “cost structure, improve operating efficiency and create long-term value for shareholders.”
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