Nio Stock Volatile As Chinese EV Maker Snags Downgrade After Q3 Results: Retail Mood Dampens
By Stocktwits Inc | First Published Nov 21, 2024, 9:59 PM ISTMacquarie’s Eugene Hsiao says weaker demand for the core Nio brand and a slower ONVO production ramp led to an 18% revenue miss versus the midpoint of the guidance range.
NYSE-listed ADSs of Chinese electric-vehicle (EV) startup Nio, Inc. ($NIO) are experiencing volatility on Thursday, as traders take stock of a negative analyst action.
A day after the company reported a double miss for the third quarter, Macquarie analyst Eugene Hsiao downgraded Nio ADS from Outperform to Neutral and reduced the price target from $6.60 to $4.80.
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Commenting on the Shanghai, China-based EV maker’s quarterly performance, Hsiao said weaker demand for core Nio brand and a slower ONVO production ramp led to a 18% revenue miss versus the midpoint of the guidance range.
Nio, which has positioned itself as a maker of premium EVs, forayed into the low-end with the mid-September launch of its first vehicle, named L60 under its affordable ONVO brand. Deliveries of L60, a mid-size all-electric SUV began in late-September.
The Macquarie analyst said he was concerned by comments that 50%-60% of ONVO orders were affected by the expiration of the local purchase subsidies by the end of 2024.
The analyst noted that revenue per car was down 12% year-on-year (YoY) in the third quarter, due to a higher mix of lower-priced ES6 and ET5T models.
Higher operating costs led to an operation loss, 18% wider than the consensus, he said, adding that this might have been due to the higher spending associated with its multi-brand strategy.
At the midpoints, Nio’s fourth-quarter volume guidance of 72,000-75,000 and revenue guidance of 19.7 billion yuan-20.3 billion yuan were 5% and 14% below the implied fourth-quarter consensus, respectively, Hsiao said.
"We think it is too early to say if NIO brand cannibalization risks are real or if Onvo demand is as strong as initial order indications suggested," Hsiao said.
"There remains upside from the Firefly launch in 1H25, and we see lower dilution risk in the near-term given the recent Rmb3.3bn investment in NIO China."
The slower pace of production ramp and negative subsidy impact have prompted Macquarie to shift to the sidelines, he added.
Following the soft outlook, the analyst lowered his volume estimates for fiscal years 2024 and 2025.
Sentiment toward the stock turned 'neutral' (48/100) on the Stocktwits platform, from an ‘extremely bullish’ mood (91/100) on Wednesday.
As of 10:53 am ET, the stock was edging up 0.22% to $4.66.
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