NIO stock slides 6.6% on negative Q1 earnings results 

Missed expectations in its first quarter results today have caused NIO stock to slide 3%. Where to from here for the Chinese EV manufacturer?

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NIO (NYSE: NIO) stock was trading down this morning after the company released its Q1 earnings results. The Shanghai-based electric vehicle (EV) manufacturer published the results for its NYSE-listed stock at 8:00 am New York time (GMT-4).

Adjusted earnings per share (EPS) were down $0.33, slightly lower than analyst’s expectations of a $0.30 decline. Revenue came in at $1.37bn, down 7.2% year on year (yoy)and missing analyst expectations of $1.44bn.

Investors reacted negatively to the results, with the share price falling 6.6% in pre-market trading.

A difficult year for EVs

The NIO share price spent much of the past year in decline, after hitting a high of $15.46 in August last year. It’s down 41% this year but remains up 91% over five years. Earnings have been negative for some time and while revenue is forecast to continue growing, it could be some time before the company becomes profitable.

Its total debt has now grown to over £3.2bn, although it’s still a fair way below its $11bn market cap.

But it’s not just the NIO share price struggling. It seems the broader EV industry has had a tough year. Fellow Chinese EV manufacturer XPeng is down 42.3% and even market leader Telsa is down almost 30%.

Some believe the troubles are a result of the lingering effects of China’s drawn-out Covid lockdown period. 

Tech challenges

However, not every car maker is in the doldrums. Lesser-known Chinese EV manufacturer Li Auto recently announced a 53% yoy increase in deliveries for Q1. What’s more, its new Mega range fleet of vehicles can fully charge in just 12 minutes — faster than it can take to fill a tank of gas. If the same technology is adopted by other manufacturers, it could present a significant challenge to NIO’s battery-swapping tech.

Battery-swapping technology has become a key selling point that NIO has put a lot of money into lately. The tech allows drivers to rapidly swap out their empty battery for a fully-charged one, rather than wait the many hours required to recharge. However, the new infrastructure required to support the tech could run into billions of dollars — potentially pushing NIO further into debt.

Record sales in May

Despite the many challenges, earlier this week NIO revealed record vehicle sales of 20,544 for May, beating its previous record set in July last year. The growth represents an increase of 233.8% yoy, bringing total sales this year up to 66,217. One of NIO’s key competitors, BYD, enjoyed similar success in May. It had its second-highest selling month with 331,817 sales, slightly below its December 2023 record.

BYD has secured its place as the leading EV manufacturer in China by selling budget vehicles for as little as $9,700.

NIO also officially launched its new Onvo brand last month. An expected increase in marketing expenses to promote the launch could put further pressure on the company’s bottom line. The first vehicle in the fleet, the L60, was announced in April with a price tag of $30,500. The SUV-coupe has been touted as a challenger to Tesla’s Model Y, with lower energy consumption and a 1,000 km range.

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Mark Hartley has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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