Nio (NIO) reported better-than-expected second-quarter earnings and gave upbeat revenue guidance as the Chinese EV startup and its domestic rivals ramp up on challenging Tesla (TSLA) in Europe. Nio stock fell Thursday.
Other China stocks sold off as well after the Communist Party’s Central Committee released late Wednesday a new five-year plan that calls for greater regulation of across a broad scope of businesses and the economy.
It follows an earlier crackdown on Chinese tech stocks, education companies and video-game publishers.
Estimates: Wall Street expected Nio to lose 9 cents a share vs. a loss of 17 cents a year ago. Revenue was seen jumping 145% to $1.31 billion, according to FactSet. Some estimates pegged Q2 sales at $1.29 billion.
Results: Nio lost 3 cents a share as revenue soared 145% to $1.31 billion.
In Q2, Nio delivered 21,896 luxury electric SUVs, a 112% increase year over year and near the top end of its 21,000-22,000 guidance. That was despite a hit to production from the global chip shortage. Nio recently reported July sales more than doubled vs. a year earlier, but they fell vs. June. Fellow China EV startups Li Auto (LI) and Xpeng Motors (XPEV) have now overtaken Nio in terms of sales.
Outlook: The EV maker sees revenue of $1.38 billion to $1.49 billion, up 97%-113% vs. a year earlier. Nio expects Q3 vehicle deliveries of 23,000-25,000, 88%-105% vs. a year earlier. That would also be a 5%-14.2% sequential gain from Q2 2021.
Wall Street forecast revenue of $1.385 billion in Q3 and $5.547 billion for all of 2021. Deutsche Bank analyst Edison Yu expects around 25,000 EV deliveries in Q3 and 95,000 for the full year.
Shares fell 3.4% to 42.47 in Thursday stock market trading. Nio stock has fallen back below the 50-day and 200-day lines. Nio has been trading around those long-term support levels for the past few weeks.
Nio stock fell 2% last week and 16% in July amid China’s intensifying crackdown on tech and other sectors. Nio has no buy point yet in a very deep consolidation, according to MarketSmith chart analysis. However, Nio could have a small cup base at the end of this week within the larger consolidation, with a 55.23 buy point.
Tesla stock rose 2% to 722.25, holding above a 700.10 early entry and breaking a trend line for another aggressive entry.
Among rival China EV stocks, Li Auto (LI) was down 2% after making its Hong Kong trading debut Thursday. Xpeng Motors (XPEV), which also has a dual listing, lost 2.9%. Like Nio stock, both are working on smaller bases within very deep consolidations.
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Nio Joins Norway Expansion
Nio, Xpeng and Li Auto are emerging rivals to Tesla, the luxury EV leader in that country. All three, along with BYD, also are expanding in Norway, where the Tesla Model 3 is the bestselling EV year to date.
Nio deliveries have begun in Norway, after shipping its first batch of ES8 electric SUVs to that country last month. And BYD has started selling its Tang electric SUV in Norway, after shipping them out in June. Rival Xpeng began selling its G3 electric SUV in Norway last December. In Norway, plug-in electric vehicles reached an 85% share of the market in June.
Meanwhile, Shanghai-based Nio is introducing a newer vehicle with more-advanced driver-assist features to market in Q1 2021. The ET7, Nio’s fourth EV and first sedan, offers driver-assist features enabled with 33 high-tech sensors. Nio currently offers three electric SUVs.
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Nio Lags China Rivals
In July, China EV companies kept up their Q2 sales momentum. Year over year, Nio sales leapt 125%, Xpeng sales jumped 228% and Li Auto sales vaulted 251%. But Xpeng and Li Auto delivered more EVs than Nio for the first time. And unlike those rivals, Nio saw July sales fall month over month, which a Citigroup analyst tied to a price cut for Tesla’s Model Y in China that month.
BYD EV sales jumped 109% in July to 24,996, while plug-in hybrid sales skyrocketed 463% to 25,601.
U.S.-listed Nio is reportedly seeking a dual primary listing in Hong Kong, after Xpeng did that in July. Li Auto has sold stock in Hong Kong as it nears a listing there.
With a dual listing, the companies seek to hedge against the risk of being delisted from U.S. exchanges. And while sales are booming, China EV stocks like Nio stock face headwinds from China’s regulatory crackdown and a Covid resurgence in that country driven by the delta variant, while the global chip shortage drags on.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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