In Q4, Nio
Inside the Numbers
The Chinese automaker delivered a loss of $0.14 per share in Q4, while analysts were looking for a $0.07 per share loss. This was an improvement from last year's $0.39 per share loss. Revenue increased by 148% to $1.02 billion which was slightly higher than expectations of $1.01 billion.
Gross margin improved to 17.2% in Q4 from -8.9% last year and 12.9% in Q3. This is certainly a positive trend and should continue as production increases. Nio's cash balance increased to $6.5 billion from $3.3 billion in Q3.
Vehicle deliveries increased by 111% to 17,353. In Q1, the company forecasts deliveries of 20,000 to 25,000 vehicles which is between a 421% and 434% increase. This would translate into revenue between $1.13 billion a $1.16 billion. CEO William Li warned that although production capacity increased to 10,000 vehicles a month in February from 7,500 in Q4. the chip shortage and could slow production.
Stock Price Outlook
NIO was one of the best-performing stocks in 2020 due to increased investor enthusiasm about the electric vehicle (EV) sector, the company's successful turnaround from poor financial conditions, and its growing traction in the Chinese market. However, there's been a major selloff in EVs with the catalysts being rising interest rates, less certainty about Democrats being able to pass a "Green New Deal", and some selling due to tax reasons. Another factor is that competition in the Chinese market continues to increase due to new entrants into the market and legacy auto companies expected to unveil their offerings.
NIO's stock topped in early January at $64. From there, shares dropped by 50% to last week's low of $32. Yesterday, it had an impressive 17% bounce. Given this steep decline, it's possible that this oversold bounce can continue. NIO's stock price can reclaim its previous highs if it can prove that it can maintain market share in China despite the new entrants.
