Why NIO Stock Is Higher Today

Why NIO Stock Is Higher Today

What happened

Shares of Chinese electric vehicle maker NIO (NYSE:NIO) were trading higher on Monday, after a Wall Street analyst shared an upbeat outlook for the company ahead of its second-quarter earnings report.

As of 1 p.m. EDT today, NIO’s American depositary shares were up about 3% from Friday’s closing price.

So what

In a new note released on Monday morning, Deutsche Bank analyst Edison Yu said that he expects NIO’s second-quarter results to come in above Wall Street’s consensus estimate. NIO will report its results after the U.S. markets close on Wednesday, Aug. 9.

Yu and his team estimate that NIO will report a loss of 0.44 Chinese yuan per share (about $0.07) on revenue of 8.57 billion Chinese yuan ($1.32 billion). Both numbers would be better than Wall Street expects. Analysts polled by Thomson Reuters currently expect NIO to report a loss of $0.11 per share on revenue of $1.28 billion.

That wouldn’t be a radical surprise, but it’s a reason for optimism, and that’s probably why the stock is trading higher today.

Now what

While Yu and his team expect NIO to beat Wall Street’s estimates, they’re not so upbeat about the company’s prospects for high growth in the third quarter amid an ongoing global shortage of semiconductors.

Yu’s team expects that NIO will guide to about 25,000 deliveries in the third quarter, which would be up 14.2% from 21,896 in the second quarter, with revenue between 9 billion yuan and 9.5 billion yuan ($1.39 billion to $1.46 billion). That’s not bad growth, but it’s not what auto investors might have reason to expect absent the chip shortage.

We’ll find out more when NIO reports on Wednesday evening.

NIO Stock News and Forecast: Shares drop as Chinese competition grows

Speaking of Warren Buffet backed BYD, the company reported its July vehicle deliveries and once again outpaced Nio. The company sold 24,996 total electric vehicles in the month, which is not just more than Nio, it is more than Nio, Li Auto, and XPeng combined . The figure represented a 139% increase year over year and a 23% increase sequentially from last quarter.

One surprising report out of China came from little known company Kaixin Auto (NASDAQ:KXIN), which until now had been involved in the used vehicle resale industry. Kaixin had acquired Haitaoche Limited earlier this year, which provides Kaixin the infrastructure to enter the more lucrative electric vehicle sector . Domestic EV makers like Nio, XPeng (NYSE:XPEV), Li Auto (NASDAQ:LI) and BYD (OTC:BYDDY) have all benefited from CCP support as the government attempts to rapidly improve China’s electric vehicle sector. The move from Kaixin adds yet another company to an increasingly crowded landscape, and another competitor for Nio in the future.

NYSE:NIO had a disappointing end to the week as the electric vehicle sector cooled off alongside other growth sectors. On Friday, shares of Nio fell by 3.86%, erasing nearly all of the gains that had been made earlier in the week . Nio shares dipped alongside the broader electric vehicle sector, as an optimistic July Jobs report cast fear into growth investors over looming interest rate hikes by the Federal Reserve. Further to this, Nio does not benefit from President Biden’t bipartisan infrastructure bill as the company has yet to break into the U.S. market.

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