NIO Beats Expectations, Stock Soars

NIO’s stock jumped 53% yesterday after announcing a reduction in net loss and a 35% increase in vehicle deliveries in its Q3 earnings report

Dec. 31, 2019

NIO’s Q3 Highlights

NIO (NYSE:NIO) stock soars over 50% after it beats analysts’ expectations in its Q3 performance announced yesterday. Here are the highlights:

  • Revenue of $257 million for the quarter, up 25% from the same time period last year and up 21.8% from Q2
  • Net loss of $352.8 million for the quarter, representing a decrease of 10.3% from the same time period last year and 23.3% from Q2
  • Deliveries of ES6 and ES8 models of 4,799 representing an increase of 35.1% from the previous quarter
  • The company expects to deliver 8,000 vehicles in Q4, an increase of 66.7% on Q3’s figures
  • It expects to increase revenue next quarter by 53% to $393.2 million
  • The announcement of its third production model, the EC6, a premium electric coupe SUV

It’s important to note these results were achieved through a time in which electric vehicle (EV) sales suffered as a whole thanks to a reduction of subsidies from the Chinese government. 

NIO’s Stock Soars, Tesla’s Slides

The Q3 announcement from ‘The Chinese Tesla’ (NASDAQ:TSLA) comes on the same day that the actual Tesla delivers its first China-made cars from its Shanghai Gigafactory. The cynic in me would suggest the timing may be more than mere coincidence from Musk & Co. However, it was Tesla’s eastern counterparts who certainly came out on top, with NIO stock growing over 50% on the day, and looking set to open even higher still when the markets open today. Tesla’s stock on the other hand, which had been on a tear this past month, dropped almost 4% yesterday over question marks of whether they will reach their delivery targets for the year.

However, while it remains a bumper day for the Chinese electric vehicle manufacturer, it’s not all roses for NIO, who announced in the report that “the Company’s cash balance is not adequate to provide the required working capital and liquidity for continuous operation in the next 12 months.” Meaning NIO will need to find some money, and fast, if it wants to stay afloat. This will be an easier job after such favorable results, yet it remains a stark reminder of the volatility of the company. 

What’s the Future for NIO?

With new product announcements, a promising outlook for the next quarter, the balance sheet moving in the right direction, and a recently announced deal with Intel (NASDAQ:INTC) to develop autonomous cars, NIO’s future looks bright. It has established itself in the biggest market for electric vehicles in the world, and as worldwide demand grows, international opportunities will arise.

Can it stick around and become the biggest competitor to Tesla in the electric vehicle industry? Only time will tell, but one thing is for sure, the next few years are going to be an exciting ride for investors.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Tesla. Read our full disclosure policy here.