Chinese electric vehicle (EV) Nio (NYSE:NIO) is scheduled to report its first-quarter results on June 9. The company failed to impress investors with its recent sales numbers, as rising competition and macro pressures continue to weigh on EV demand. However, Wall Street is looking beyond the ongoing weakness and upcoming Q1 results and remains bullish about Nio’s long-term prospects.
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Nio Earnings Estimates
Nio’s 31,041 deliveries in Q1 2023 were below the mid-point of its guidance of 31,000 to 33,000 vehicles. Although Q1 2023 deliveries increased 20.5% year-over-year, they declined sequentially compared to Q4 2022.
Moreover, Nio’s April deliveries of 6,658 EVs improved 31.2% year-over-year but declined when compared to March deliveries of 10,378 vehicles. Further, the company delivered 6,155 vehicles in May, reflecting a sequential decline from April. The upgrade of Nio’s EVs from its Nio Technology 1.0 platform to Nio Technology 2.0 is one of the reasons for the weak numbers.
Nonetheless, the company is optimistic about the road ahead based on new vehicle launches, including the all-new ES6 SUV (launched on May 24) built on Nio Technology 2.0 platform and the upcoming model ET5 Touring. Investors will look forward to Nio’s guidance for the second quarter and management’s commentary about the demand scenario.
Analyst Thoughts on NIO Stock
Heading into Q1 Results, Deutsche Bank (DB) analyst Edison Yu reiterated a Buy rating on Nio stock but lowered his price target to $13 from $19, as he noted that the underlying demand for Nio’s premium battery EVs has been unimpressive, with customers preferring BMW Brilliance Automotive (BBA) gasoline models and Li Auto’s (LI) extended range EVs.
Yu expects Nio to generate RMB 10.9 billion in revenue, a gross margin of 2.5%, and an adjusted loss per share of RMB 3.07, compared to Wall Street’s consensus of RMB 11.7 billion in revenue, a gross margin of 7.4%, and an adjusted loss per share of RMB 2.66.
While the analyst slashed his 2023 volume forecast by 55,000 to 155,000 units, he continues to be bullish on Nio due to his confidence in the company’s long-term strategy of having multiple brands.
Is Nio Stock a Buy?
Wall Street’s Strong Buy consensus rating on Nio is based on four unanimous Buys. The average price target of $15.08 implies over 91% upside. Shares have fallen more than 19% year-to-date.
Technical Indicators Ahead of Nio’s Earnings
Ahead of the Q1 earnings release, technical indicators reveal that Nio is a Sell. According to TipRanks’s easy-to-understand technical tool, NIO’s 50-Day EMA (exponential moving average) is 8.43, while its price is $7.88, making it a Sell. Further, NIO’s shorter duration EMA (20-day) also signals a negative trend.
Conclusion
Given Nio’s dismal EV deliveries in recent months, investors will focus on the company’s outlook for the quarters ahead. Wall Street continues to believe in Nio’s technology, its ability to win more market share in China with its new models, and further expansion in Europe and other key growth markets. In contrast, technical indicators reveal that Nio is a Sell.
