- Chinese electric automaker Nio leaped as much as 11% in early Tuesday trading after beating second-quarter estimates and posting positive gross margin for the first time ever.
- The company nearly tripled vehicle deliveries through the quarter and crept closer to profitability with a smaller loss than expected.
- Nio also guided for a strong third quarter, with sales and revenue both projected to hit record highs.
- The firm expects to “meet the accelerated demand of our models” once production constraints are lifted, CEO William Bin Li said.
- Watch Nio trade live here.
Chinese automaker Nio soared as much as 11% in early Tuesday trading after crushing earnings expectations and creeping closer toward profitability.
The company shrank its quarterly loss for the fourth quarter in a row after nearly tripling its vehicle deliveries from the year-ago period. Gross margin landed above zero for the first time.
Shares launched roughly 6% higher in Monday’s session before Nio revealed its quarterly figures. A strong rally through July pushed the electric car manufacturer’s stock to record highs, and shares now sit about 282% higher year-to-date.
Here are the key numbers:
Revenue: 3.72 billion yuan ($540 million), versus the 3.49 billion yuan ($500 million) estimate
Loss per American depository receipt: 1.08 yuan (16 cents), versus the 1.66 yuan (24 cents) estimate
Gross margin: 8.4%, versus -33.4% in the year-ago period
Vehicle deliveries: 10,331, versus 3,553 in the year-ago period
Nio also guided for a strong third quarter, even as many firms withhold official forecasts. The company sees current-quarter deliveries landing between 11,000 and 11,500 vehicles, compared to selling just 4,799 vehicles in the third quarter of 2019. Revenue will range from 4.05 billion yuan ($580 million) to 4.21 billion yuan ($610 million), according to the company.
The second-quarter earnings beat is more impressive considering supply chain disruptions and demand weakness prompted by the coronavirus pandemic. The company slashed costs and borrowed more to maintain healthy cash flow throughout the health crisis, yet was still able to keep its gross margin positive.
Though the company has performed well through the economic slump, Nio is well positioned for a recovery, CEO William Bin Li said in the Tuesday report.
"The current constraints on the productions will be lifted in the near future and we are confident that our production capacity can meet the accelerated demand of our models," he said.
To be sure, the company has plenty of ground to cover before catching up with Tesla. Registrations for Teslas in China reached 50,000 in the first half of the year, easily surpassing Nio's sales pace. Elon Musk's company is also ramping up Model Y production at its new Shanghai plant after producing only Model 3 sedans in the country.
Nio closed at $14.21 per share on Monday. The automaker has five "buy" ratings, seven "hold" ratings, and three "sell" ratings from analysts, according to Bloomberg data.
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