Chinese electric vehicle maker Nio (NIO) reported its Q1 2022 results ahead of the opening bell on June 9. The stock fell about 6.7% in today’s session.
Nio has four car models on the market. Although it is currently heavily dependent on its domestic Chinese market, Nio is on a global expansion drive that has seen it enter several markets in Europe. Apart from its better-known rival Tesla (TSLA), Nio also competes with domestic brands Li Auto (LI) and Xpeng (XPEV).
Nio’s Earnings at a Glance
Revenue rose 24.2% year-over-year to RMB9.91 billion ($1.56 billion), slightly exceeding the consensus estimate of RMB9.9 billion. The adjusted loss per share of RMB0.79 widened from RMB0.23 loss per share in the same quarter the previous year but still beat the consensus estimate of RMB0.94 loss per share.
Nio delivered 25,768 vehicles in the quarter, compared to the 20,060 cars it delivered in the same quarter a year ago. The company’s total deliveries have exceeded 200,000 in the four years since sales began. The EV maker ended the quarter with about $8.4 billion in cash.
Nio CEO, William Bin, said, “Despite the volatilities of supply chain and the challenges in vehicle delivery resulting from the recent COVID-19 resurgence, we witnessed robust demand for our complementary products and achieved an all-time high order inflow in May 2022.”
Downbeat Q2 Revenue Outlook
Although its Q1 results slightly exceeded Wall Street expectations, Nio issued a downbeat outlook for Q2. That may explain the EV stock’s decline following the earnings release. The company anticipates Q2 revenue in the range of RMB9.34 billion to RMB 10.09 billion. Although that implies growth of 10.6% to 19.4%, the revenue guidance falls short of the consensus estimate of RMB 11.65 billion.
Nio expects to deliver between 23,000 and 25,000 cars in the quarter, compared to 21,896 cars delivered in the same quarter the previous year.
Wall Street’s Take
On June 7, Deutsche Bank analyst Edison Yu maintained a Buy rating on Nio with a price target of $45, which implies about 121% upside potential.
Consensus among analysts is a Strong Buy based on 13 Buys. The average Nio price target stands at $41.09 and implies upside potential of 112.02% to current levels. Shares have gained 152.3% over the past year.
Smart Score
Nio scores a nine out of 10 from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
Key Takeaway for Investors
Nio’s big loss in Q1 can be excused considering the company still has many investment needs, especially as it expands overseas. However, demand for EVs remains strong, and the company’s future looks promising as it enters Europe. Apart from selling cars, Nio continues to explore additional revenue opportunities, including licensing its battery swap technology.
Read full Disclosure
