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Factors to Note if You're Thinking of Buying NIO Stock Pre Q2 Earnings
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China-based EV company NIO Inc. (NIO - Free Report) is slated to release second-quarter 2024 results on Sep. 5, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at a loss of 46 cents a share on revenues of $2.35 billion.
The loss estimate for the second quarter of 2024 has widened by 11 cents a share over the past 90 days. The bottom-line projection indicates a year-over-year improvement of 9.8%. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year surge of 94.5%.
For the current year, the Zacks Consensus Estimate for NIO’s revenues is pegged at $9.17 billion, implying a rise of 17.8% year over year. The consensus mark for the 2024 bottom line is pegged at a loss of $1.43 per share, indicating an improvement from a loss of $1.75 in 2023. In the trailing four quarters, NIO surpassed EPS estimates twice for as many misses, with the average negative earnings surprise being 8.02%.
Our proven model does not conclusively predict an earnings beat for NIO this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
NIO has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell).
For the three months ended June. 30, NIO delivered 57,373 vehicles, representing a 144% year-over-year jump. This figure also reflects a significant rise from the 30,053 units delivered in the first quarter of 2024. The second-quarter deliveries set a new quarterly record for the company, surpassing its projected range of 54,000 to 56,000 vehicles.
Revenues for the quarter to be reported are expected to have benefited from increased deliveries. However, that is likely to have been somewhat offset by pricing pressures thanks to stiff competition in the EV landscape. In June, the company slashed prices by $4,200 for all models, including its refreshed ES6 and ES8 SUVs.
Owing to the volume ramp-up of its 2024 models and cost containment efforts, the company expects its vehicle margin to follow an upward trajectory starting from the second quarter of 2024. For the second quarter, NIO expects the vehicle margin to be in double digits. This indicates an improvement from 9.2% in the first quarter of 2024.
Nonetheless, NIO has been bearing the brunt of operational inefficiency. In the last reported quarter, SG&A expenses were up 22.5% on a year-over-year basis. The trend is expected to have continued amid an increase in personnel costs and a rise in sales and marketing activities. High operating expenses are likely to have weighed on profit margins. Investments in battery swapping stations and store expansion might also have adversely impacted cash flows and financials.
NIO’s Price Performance & Valuation
On a year-to-date basis, shares of NIO have declined 55%, underperforming the industry, sector and the S&P 500 Index as well as its close peers — Li Auto (LI - Free Report) and XPeng (XPEV - Free Report) .
YTD Price Performance
Image Source: Zacks Investment Research
NIO is currently trading at a forward sales multiple of 0.52, higher than the industry but below its median of 2.04 over the last five years.
Image Source: Zacks Investment Research
How to Play NIO Stock Now?
The company’s vehicle lineup, including the upgraded ET7 model and popular models like the ES6, ES8, ET5T, and EC7, positions it well. The recent launch of the ONVO brand, aimed at the mainstream family market, underscores NIO’s ambition to expand its market reach. NIO’s battery swap technology, integral to its Battery as a Service (BaaS) strategy, offers a distinct competitive advantage. The company’s plan to build more than 1,000 new battery swap stations in 2024 and its broader “Power Up Counties” initiative to cover more than 2,300 counties in China by 2025 reflect its commitment to EV infrastructure expansion and market leadership in China.
However, despite these potential growth drivers, NIO faces significant challenges. The company’s financial health is deteriorating, with a wider-than-expected loss in first-quarter 2024 marking its 11th consecutive earnings miss. A shrinking cash reserve, down from $4.6 billion at the end of 2023 to $3.3 billion by March 2024, heightens the risk of further dilution and increased leverage. Until NIO demonstrates sustained profitability and stronger fundamentals, the stock remains a risky bet. Investors are advised to remain on the sidelines for now, closely monitoring the company's vehicle margins, new model sales performance and the upcoming results for clearer signals.
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Factors to Note if You're Thinking of Buying NIO Stock Pre Q2 Earnings
China-based EV company NIO Inc. (NIO - Free Report) is slated to release second-quarter 2024 results on Sep. 5, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at a loss of 46 cents a share on revenues of $2.35 billion.
The loss estimate for the second quarter of 2024 has widened by 11 cents a share over the past 90 days. The bottom-line projection indicates a year-over-year improvement of 9.8%. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year surge of 94.5%.
For the current year, the Zacks Consensus Estimate for NIO’s revenues is pegged at $9.17 billion, implying a rise of 17.8% year over year. The consensus mark for the 2024 bottom line is pegged at a loss of $1.43 per share, indicating an improvement from a loss of $1.75 in 2023. In the trailing four quarters, NIO surpassed EPS estimates twice for as many misses, with the average negative earnings surprise being 8.02%.
NIO Inc. Price and EPS Surprise
NIO Inc. price-eps-surprise | NIO Inc. Quote
Earnings Whispers for NIO Stock in Q2
Our proven model does not conclusively predict an earnings beat for NIO this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
NIO has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
What’s Shaping NIO’s Q2 Results
For the three months ended June. 30, NIO delivered 57,373 vehicles, representing a 144% year-over-year jump. This figure also reflects a significant rise from the 30,053 units delivered in the first quarter of 2024. The second-quarter deliveries set a new quarterly record for the company, surpassing its projected range of 54,000 to 56,000 vehicles.
Revenues for the quarter to be reported are expected to have benefited from increased deliveries. However, that is likely to have been somewhat offset by pricing pressures thanks to stiff competition in the EV landscape. In June, the company slashed prices by $4,200 for all models, including its refreshed ES6 and ES8 SUVs.
Owing to the volume ramp-up of its 2024 models and cost containment efforts, the company expects its vehicle margin to follow an upward trajectory starting from the second quarter of 2024. For the second quarter, NIO expects the vehicle margin to be in double digits. This indicates an improvement from 9.2% in the first quarter of 2024.
Nonetheless, NIO has been bearing the brunt of operational inefficiency. In the last reported quarter, SG&A expenses were up 22.5% on a year-over-year basis. The trend is expected to have continued amid an increase in personnel costs and a rise in sales and marketing activities. High operating expenses are likely to have weighed on profit margins. Investments in battery swapping stations and store expansion might also have adversely impacted cash flows and financials.
NIO’s Price Performance & Valuation
On a year-to-date basis, shares of NIO have declined 55%, underperforming the industry, sector and the S&P 500 Index as well as its close peers — Li Auto (LI - Free Report) and XPeng (XPEV - Free Report) .
YTD Price Performance
Image Source: Zacks Investment Research
NIO is currently trading at a forward sales multiple of 0.52, higher than the industry but below its median of 2.04 over the last five years.
Image Source: Zacks Investment Research
How to Play NIO Stock Now?
The company’s vehicle lineup, including the upgraded ET7 model and popular models like the ES6, ES8, ET5T, and EC7, positions it well. The recent launch of the ONVO brand, aimed at the mainstream family market, underscores NIO’s ambition to expand its market reach. NIO’s battery swap technology, integral to its Battery as a Service (BaaS) strategy, offers a distinct competitive advantage. The company’s plan to build more than 1,000 new battery swap stations in 2024 and its broader “Power Up Counties” initiative to cover more than 2,300 counties in China by 2025 reflect its commitment to EV infrastructure expansion and market leadership in China.
However, despite these potential growth drivers, NIO faces significant challenges. The company’s financial health is deteriorating, with a wider-than-expected loss in first-quarter 2024 marking its 11th consecutive earnings miss. A shrinking cash reserve, down from $4.6 billion at the end of 2023 to $3.3 billion by March 2024, heightens the risk of further dilution and increased leverage. Until NIO demonstrates sustained profitability and stronger fundamentals, the stock remains a risky bet. Investors are advised to remain on the sidelines for now, closely monitoring the company's vehicle margins, new model sales performance and the upcoming results for clearer signals.