Nio Inc (NIO)

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Nio (NIO) jumps in pre-market following narrow 3Q losses
By: Investing | December 5, 2023

Shares of Chinese electric automaker, Nio Inc. (NYSE:NIO) jumped 4% in pre-market trading after the company released their 3Q earnings report showing narrowing losses.

Nio announced revenue of 19.07 billion yuan in the quarter, coming in behind the consensus estimate of 19.4 billion. Revenue rose 47% year-on-year.

The automaker reported an adjusted EPS loss of 2.67 yuan, missing an expected loss of 2.53 yuan.

Investors are directing their attention towards the Chinese electric carmaker's capacity to exhibit greater fiscal discipline while navigating its path towards profitability.

Nio's CEO, William Li, reaffirmed the company's commitment to enhanced efficiency as a fundamental focus.

“We have identified opportunities to optimize our organization, reduce costs and enhance efficiency,” Li said.

Several of these initiatives have begun to show positive results. In the third quarter, Nio reported a net loss of 4.6 billion yuan, marking a 24.8% decrease from the second quarter of 2023. However, it remained higher than the corresponding period in 2022.

Additionally, the company recently downsized its workforce by 10% last month, attributing the decision to "fierce competition."

The electric vehicle landscape in China is fiercely competitive, with Nio contending with pressure from emerging startups like Xpeng (NYSE:XPEV) and Li Auto (NASDAQ:LI), as well as established giants such as Tesla (NASDAQ:TSLA) and BYD.

Adding to the challenge, Chinese consumers are exhibiting caution in their spending habits, potentially impacting Nio's strategy aimed at capturing the premium segment within the local EV market.

Nio's projected fourth-quarter revenue is estimated to fall between 16.1 billion yuan and 16.7 billion yuan. This forecast represents a year-on-year increase ranging from 0.1% to 4.0%. However, analysts had initially anticipated a higher forecast of 22.4 billion yuan for the December quarter.

Nio expects to distribute between 47,000 and 49,000 vehicles in the fourth quarter. This projection signifies a notable increase of approximately 17.3% to 22.3% compared to the same period last year.

Shares of NIO are up 1.5% in afternoon trading on Tuesday.

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