Last Thursday, Chinese electric vehicle maker Nio (NYSE:NIO) issued its May 2023 update on cars delivered year-to-date. And specifically, Nio revealed that it has now delivered 43,854 electric vehicles to its customers in 2023 — a 15.8% increase in deliveries compared to where the company was at this time, last year.
Now, Nio didn’t mention how much a 15.8% increase in units delivered translates into dollars and cents (or yuan, or renminbi, either). For a company that has never earned a profit in its nine-year history, that lost $2 billion last year, and that analysts have pegged for a $1.7 billion loss this year, investors may find that a bit disconcerting. By all accounts, Nio is supposed to be on the cusp of a turnaround, with losses predicted to slow by two-thirds in 2024, and to turn positive the year after that.
Nio did note, however, that since starting operations in 2014 it has now delivered 333,410 EVs to its customers. And with the introduction of its all-new ES6 electric SUV in May, offering “enhanced driving and riding experiences with exquisite design, high performance, superior comfort, and advanced digital systems,” and the new ES5 “smart electric tourer” scheduled to go on sale this month, Nio will be aiming to grow sales even further as the year progresses.
So, a lot of optimistic news there. However, we can’t overlook the fact that there are a few reasons why Nio stock might potentially go down after the Q1 earnings, set to be revealed on Friday, June 9. Let’s start with those May sales.
43,854 EVs delivered through May was enough to lift 2023 YTD sales 15.8%, as already noted. But 6,155 EVs delivered in May is a different story. While Nio didn’t emphasize the fact (or indeed, even mention it) in its press release, it turns out that in May 2022 Nio actually delivered 7,024 electric vehicles. Thus, while EV deliveries were up 15.8% through May, EV deliveries were actually down 12.14% in May.
Which puts a bit of a different twist on the story, doesn’t it?
Furthermore, Wall Street analysts are telling investors to expect Nio to report $1.6 billion in sales and a $583 million net loss. If these are the numbers Nio does in fact report, it will represent 17% sales growth year over year — but losses rising by more than twice.
Losses rising at a company that is supposed to be cutting its losses ahead of a turn to profitability less than two years from now is obviously not a great look. Nio aiming for a 17% sales gain, right after reporting a 12% decline in sales in May also seems a bit suspicious.
Long story short, there’s a lot riding on Friday’s earnings report — and at least a couple of ways it could go badly wrong.
On the positive side, NIO stock has managed to pick up a unanimous Strong Buy consensus rating from Wall Street, based on 4 positive reviews. NIO shares are priced at $7.61 and their $15.08 average target implies ~98% gain in the next 12 months. (See NIO stock forecast)
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