Nio's (NIO) Sales Surged 127% in Q2, Working on a New Mass-market Brand to Take on Tesla (TSLA), Volkswagen (VWAGY), and Toyota (TM), Analyst Lowers PT on Conservative Guidance
Shares of Nio (NYSE: NIO) are trading modestly higher in pre-open Thursday after the Chinese electric vehicle (EV) company topped analyst estimates for the second quarter.
Nio posted a 0.42 yuan ($0.07) per share loss in Q2, much lower than the expected loss of 0.68 yuan per share. This compared to a 1.15 yuan loss per share recorded a year ago.
Sales also delivered a beat after soaring 127.2% on a YoY basis to 8.45 billion yuan ($1.31 billion), higher than the 8.32 billion yuan expected.
Nio so far offers 3 models - all SUVs. The plan is in place to launch the first sedan in 2022.
“As the EV adoption begins to reach a tipping point worldwide, we believe it is imperative to speed up the launch of new products to provide more premium smart EV offerings with superior holistic services to the growing user base in the global market,” William Bin Li, CEO of Nio, said.
Li also said the company plans to launch a new project to take on the world’s biggest carmakers, including Volkswagen and Toyota. A project to launch a mass-market new brand is already underway.
"The relationship between Nio and our new mass-market brand will be like that of Audi-Volkswagen and Lexus-Toyota. We want to provide better product and service at prices lower than Tesla," Li added.
On the guidance front, Nio projects sales between 8.91 billion yuan and 9.63 billion yuan as it aims to deliver between 23,000 and 25,000 EV units. For Q2, the company delivered 21,896 vehicles, up from 10,331 units in the same period last year.
“The issue for Nio, for Tesla, for others, every car that they’re making, they’re selling. It’s really production and chip shortage, and ... that’s going to be an overhang on the overall EV (electric vehicle) space,” Wedbush analyst Daniel Ives told CNBC.
“For Nio, the key for success is really going to be on the battery technology. I believe they have massive innovations on the horizon. And I think this is one that when we look out over the next year or two, beside just the stock I think goes massively higher, I think market share potentially can double,” he added.
Still, Citi analyst Jeff Chung lowered the price target to $70.00 per share from $72.00 after the company delivered “neutral” Q2 results and “conservative” guidance.
“We maintain our 21-23E volume forecasts but cut FY21/22/23 blended GPMs to 18%/20%/22% (from 20%/23%/23%) and blended vehicle ASP by 5%. Our more conservative vehicle GPM/ASP forecasts are due to: (1) accelerating D&A cost from the old NT1.0 platform—D&A per vehicle to accelerate by around 2% HoH in 2H21E; (2) NOP revenue mix has been skewing toward the cheaper Rmb15k package; (3) existing products’ potential ASP decline into 2022-23E due to market competition; and (4) a higher capex outlook in view of expanding auto capacity, software intangible assets, and a power station & related facilities construction,” Chung wrote in a client note.
Shares of Nio are down nearly 18% YTD.