Nio's Shares Plunge 6% After Top and Bottom Line Beat

The stock in the Chinese EV giant can only accelerate so fast so quickly.
Anthony RussoNov 18,2020,15:33

Shares of Nio (NYSE: NIO) slipped 6% in early trading Wednesday after posting better-than-anticipated top and bottom line financials for the third quarter.

The Chinese electric vehicle giant said in a statement Tuesday after the markets closed that its revenue in the three months ending September surged 146% to $666.6 million on an adjusted loss of 12 cents per share.

According to a FactSet survey of five analysts, estimates pointed towards Nio posting revenue of $664 million on a loss of 18 cents per share.

The Shanghai-based company generated $628.4 million in vehicle sales in the quarter, representing a 146% gain from the same period in 2019. In total, Nio delivered 12,206 vehicles in the quarter, up by more than double from the 4,799 figure in the same period of the preceding year. It’s also off to a solid start in the fourth quarter, as it delivered 5,055 vehicles in October.

“With another quarter of record-high deliveries in the third quarter of 2020, plus further improvements in average selling price, material cost and manufacturing efficiency, our vehicle margin increased to 14.5%,” William Bin Li, the founder, chairman, and chief executive officer of Nio, said in a statement today.

He added, “Additionally, we achieved positive cash flow from operating activities for the second sequential quarter.”

Overall, it was a solid quarter for Nio—but that didn’t stop its stock from falling today. With shares of Nio up almost 1,000% this year, the company may have needed a blowout quarter to drive up its stock today.

Plus, the news by Nio today comes after short seller and Citron Research editor Andrew Left, who was once bullish on the company, told investors late last week that it’s time to dump the stock.

“After a rocky road of trading, NIO has found itself in unchartered territory that can never be justified by its current standing in the China EV market or its near-term prospects,” Left wrote on Friday.

As for its Chinese EV rivals XPeng (NYSE: XPEV) and Li Auto (Nasdaq: LI), both companies saw their stocks down both 3% in early trading Wednesday.

But still, investors have been betting on the future and are hoping that these EV makers will turn profitable as soon as possible.

Speaking of the future, Nio expects to deliver vehicles in the range of 16,500 to 17,000 in the fourth quarter. According to Barron’s, that should turn into sales of around $930 million, ahead of what analysts were expecting.

Topics:Nio, Li Auto, XPeng.