NIO Set to Report Second-Quarter Results Amidst Questions About Competition and Demand

Chinese EV start-up NIO is preparing to release its second-quarter numbers on Tuesday morning, with investors eager to gain insights into the company's performance amidst concerns regarding competition, demand, pricing, and the Chinese economy. While earnings will be a significant focus, investors will also pay attention to other key details.

Financial Expectations and Performance

Analysts predict that NIO will report a per-share loss of approximately 33 cents from $1.3 billion in sales, according to Bloomberg's analysis. However, FactSet's estimates indicate a slightly larger per-share loss of 41 cents. Sales estimates are consistent between the two sources. It is worth noting that FactSet aggregates data from five different sources, while Bloomberg uses nine estimates.

Comparing to the previous year, NIO (ticker: NIO) recorded an adjusted loss of 19 cents per share from $1.5 billion in sales. This decline in sales is attributed to a decrease in deliveries. In the second quarter of 2022, NIO delivered around 23,500 units, which dipped compared to the approximately 25,000 units delivered during the same period in 2023.

Anticipating a Strong Third Quarter

Despite the challenges faced in the second quarter, experts expect a significant rebound in the third quarter. In July alone, NIO delivered 20,462 units—driven by the increasing popularity of the ES6 SUV since its launch in May 2023. Notably, deliveries exceeded 10,000 units in July.

As NIO prepares to release its second-quarter results, investors eagerly await more comprehensive insights into the company's performance. Focus will be on not only the bottom-line earnings but also factors such as competition, demand, pricing, and the overall state of the Chinese economy.

NIO's Delivery Guidance and EV Demand in China

Wall Street is anticipating approximately 50,000 units to be delivered by NIO in the third quarter. Based on the July figures, this target seems achievable.

The delivery guidance provided by NIO not only sheds light on the company's performance but also reveals insights into the demand for electric vehicles (EVs) in China. According to Citi analyst Jeff Chung, battery-electric vehicle demand has increased by about 25% year over year in the first seven months of this year. Although this growth is strong, there is a slight dip in August sales compared to the previous year.

The decline in sales could explain why Chinese EV manufacturers, including Tesla (TSLA), have reduced prices on around 25 models in August.

Investors have been wary of the declining sales and weakening demand in the EV market. Over the past 12 months, NIO shares have dropped by approximately 45% and have seen a decrease of around 28% in the last month. In comparison, the S&P 500 index has had a growth of about 10% over the past year but has experienced a 4% decrease in the last month.

To address these concerns, management will be hosting a conference call at 8 a.m. Eastern time to discuss the company's results. Analysts and investors will be eager to learn more about various factors affecting NIO stock, including deliveries, demand trends, and the overall state of the Chinese economy.