Electric vehicle maker Nio (NIO) presented mixed results for the third quarter. The company saw a 12% year-over-year increase in vehicle deliveries but suffered a 4% drop in revenue due to China’s continuing price war. However, the company anticipates a bounce back, with projected increases in vehicle deliveries and revenue for Q4, driven by introducing new brands and models, including the Onvo and the upcoming launch of the Firefly.
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Yet, given the uncertainties related to the incoming Trump administration’s potential tariff policies, investors may want to hold off and monitor Nio’s production of these newer models and the possible impact of tariffs on the global economy.
Nio Continues to Expand its Offerings
NIO is a prominent player in the Chinese electric vehicle market. It specializes in designing, developing, and selling electric vehicles, focusing on premium and family-oriented models under its NIO and ONVO brands.
The company recently launched its new SUV, the ONVO L60, and announced plans to mass-produce its flagship ET9 model. It also introduced a new compact vehicle brand, the Firefly.
Analysis of Nio’s Recent Financial Results
The company recently announced results for Q3 2024. Total revenue in Q3 2024 decreased by 2.1% from Q3 2023 but saw a 7.0% increase from Q2 2024, landing at RMB18,673.5 million (US$2,661.0 million). This was primarily driven by vehicle sales reaching RMB16,697.6 million (US$2,379.4 million), a decrease of 4.1% from Q3 2023 but an increase of 6.5% from Q2 2024. The vehicle margin rose to 13.1% in Q3 2024, up from 11.0% in Q3 2023 and 12.2% in Q2 2024.
The company’s gross profit rose by 31.8% from Q3 2023 and 18.9% from Q2 2024 to reach RMB2,007.4 million (US$286.0 million) in Q3 2024. The gross margin was 10.7% in the same period, increasing from 8.0% in Q3 2023 to 9.7% in Q2 2024.
Meanwhile, the loss from operations increased by 8.1% from Q3 2023 and 0.5% from Q2 2024 to reach RMB5,237.8 million (US$746.4 million) in Q3 2024. The company reported a net loss of RMB5,059.7 million (US$721.0 million) in Q3 2024, an increase of 11.0% from Q3 2023 and 0.3% from Q2 2024.
As of the quarter’s end, the company’s cash and cash equivalents, restricted cash, short-term investment, and long-term time deposits amounted to RMB42.2 billion (US$6.0 billion).
Is NIO a Buy?
The stock has been volatile (beta 1.98), falling by over 35% in the past year. It trades near the low end of its 52-week price range of $3.61 – $9.57 and demonstrates negative price momentum as it trades below the 20-day (4.92) and 50-day (5.12) moving averages.
Analysts following the company have had broadly divergent opinions of NIO stock. Recently, Goldman Sachs has downgraded NIO to a Sell rating due to a limited pipeline of new models, sluggish production, and intensifying competition in the electric vehicle market. Goldman also expects NIO to miss its fourth-quarter revenue guidance due to weak sales momentum and production ramp-up.
Based on the cumulative recommendations of 15 analysts, Nio is rated a Moderate Buy overall. The average price target for NIO stock is $6.05, representing a potential upside of 29.55% from current levels.
Bottom Line on Nio
Despite the mixed results in the third quarter, Nio remains optimistic about future growth. However, the current market conditions and potential regulatory changes urge a cautious approach. Investors should stay alert to shifting landscapes in the ever-evolving EV marketplace to make an informed decision on the stock.
