On Thursday, Citi reiterated its Buy rating and $10.40 price target for shares of electric vehicle manufacturer NIO Inc . (NYSE:NIO) stock, following the company's first-quarter performance.
The firm's analysis highlighted that NIO's gross profit margin (GPM) for vehicles in the first quarter matched the Bloomberg consensus at 9.2%.
However, the GAAP net loss of RMB 5.29 billion did not meet expectations, showing a 6% quarter-over-quarter improvement but a 9% year-over-year increase.
NIO provided its volume and revenue guidance for the second quarter of 2024, which projects continued challenges. The company anticipates a net loss around RMB 5 billion, based on several assumptions including second-quarter volumes of 56,000 units, vehicle revenue at RMB 15.3 billion, and a 2% quarter-over-quarter decrease in average selling price.
Additionally, other revenues are expected to reach RMB 1.6 billion, with a divisional GPM at -22%, leading to a divisional gross loss of RMB 341 million.
The analysis forecasts an improvement in NIO's second-quarter vehicle GPM to 11.2%, with a significant 20% quarter-over-quarter increase in gross profit per vehicle, reaching RMB 30.7 thousand. This is expected to contribute to a blended GPM of approximately 8% for the quarter.
The company's investment in research and development (R&D) is projected to remain relatively stable compared to the previous quarter, while selling, general and administrative (SG&A) expenses are expected to rise by 20% quarter-over-quarter, accounting for 21% of revenue.
These projections indicate that while NIO is managing to control some costs, it is still grappling with significant losses as it navigates the competitive electric vehicle market.
In other recent news, Nio (NYSE:NIO) Inc, the Chinese electric vehicle manufacturer, projects a significant increase in its Q2 electric vehicle sales and revenue, aiming to correct the Q1 loss report.
The company anticipates its EV deliveries to more than double from the previous year, ranging between 54,000 and 56,000 units. Nio also expects its Q2 revenue to nearly double to approximately $2.3 million, following a substantial net loss of $718 million in Q1.
Nio has also secured approval to construct a third production facility in China, further expanding its manufacturing capacity. The new facility, known as the F3 plant, will focus on producing models for Nio's more affordable car brand, Onvo. The move aligns with the company's strategy to increase sales through more competitively priced models.
Meanwhile, Nio is among a select group of automakers approved by China to begin public road tests of level three autonomous driving technologies. This development is part of China's broader initiative to expedite the integration of highly autonomous vehicles into the market.
Morgan Stanley has maintained its Overweight rating on Nio, with a steady price target of $10.00, following a notable performance by the electric vehicle maker's stock and heightened Q2 volume guidance expectations.
However, BofA Securities revised its price target for Nio down to $5.90 from the previous $6.50, due to an anticipated increase in the company's operating expenses for the year 2024. These developments provide a clearer picture of Nio's current financial health and future expectations.
InvestingPro Insights
As NIO Inc. (NYSE:NIO) continues to navigate through the competitive electric vehicle landscape, recent data from InvestingPro sheds light on the financial health and market sentiment surrounding the company. With a market capitalization of $10.9 billion, NIO's valuation reflects its position as a prominent player in the Automobiles industry. Notably, the company's balance sheet holds more cash than debt, which can be a reassuring sign for investors. However, NIO's struggle with profitability is evident, as the company has not been profitable over the last twelve months and analysts do not anticipate profitability this year either.
The financial metrics reveal a P/E ratio of -2.41 and an adjusted P/E ratio for the last twelve months as of Q4 2023 at -3.75, underscoring the company's earnings challenges. Furthermore, the gross profit margin for the same period stood at a modest 5.49%, reflecting some of the operational difficulties NIO faces. With the stock price experiencing significant volatility, including a 32% drop over the last six months, investors should be aware of the potential risks associated with such fluctuations.
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