NIO Stock Rises After Strong Q2, Upbeat Guidance: Retail’s Not Convinced

NYSE-listed shares of Chinese EV-maker Nio Inc (NIO) rose nearly 6% on Thursday morning after the firm posted an upbeat set of earnings and better-than-expected deliveries forecast for the current quarter.

Nio reported a 118% year-over-year (YoY) jump in its second-quarter vehicle sales to RMB 15.68 billion. The quarter saw total revenues rise 99% YoY to RMB 17.45 billion, higher than a median analyst estimate of RMB 17.16 billion. The EV-maker also reported a massive improvement in its gross margins, which rose 870 basis points YoY to 9.70%, led by its ongoing cost optimizations.

Meanwhile, net loss narrowed to RMB5.05 billion compared to RMB6.06 billion in the same period a year ago.

For the third quarter, Nio expects deliveries to range from 61,000 to 63,000 vehicles, which topped an estimate of 56,770. The firm expects revenue to come in between RMB 19.11 billion and RMB 19.67 billion versus an analyst expectation of RMB 19.32 billion.

Notably, China has reportedly doubled the subsidies for EV-buyers to RMB20,000 per vehicle to accelerate the transition to clean energy.

However, retail sentiment on Stocktwits edged lower into the ‘neutral’ territory (49/100) from ‘bullish’ a day ago. The move was accompanied by high message volume. The lack of confidence comes at a time when the stock has lost nearly half of its value this year.

Bullish followers of the firm on Stocktwits are impressed with the earnings. One user highlighted the improvement in margins, citing it as the highlight of the earnings.

CFO Stanley Yu Qu stated that the firm will continue to focus on efficient R&D and infrastructure investment, leverage the growth potential in the mass market, adopt flexible market strategies and continuously optimize its product portfolio. “We are confident that these efforts will result in steady improvements in gross profit and cost efficiency in the future,” he said.

Notably, NIO shares have lost over 93% of their value since the highs seen in January 2021. However, the firm’s improving sales, strong financial metrics and its upbeat guidance have grabbed investor attention for the time being.

Also See: Verizon To Buy Frontier Communications In $20B All-Cash Deal: Here’s How Retail Reacted