Nio Stock Slumps Ahead Of Q3 Results: Analyst Says Q4 Outlook Is Key But Retail Sentiment Sours

Chinese electric-vehicle maker Nio, Inc. ($NIO) is due to report its third-quarter results before the market opens on Wednesday. 

Peer XPeng, Inc. ($XPEV) announced a double beat for its third quarter and issued an upbeat fourth-quarter guidance on Tuesday. Notwithstanding the solid report, the stock was seen sliding nearly 3%. Nio moved in sympathy, with the stock shedding about 2% at last check.

Analysts, on average, expect Shanghai, China-based Nio to report a third-quarter loss of $0.27 per American Depositary Share (ADS) and revenue of $2.64 billion. The company's guidance issued in early September calls for revenue of $2.63 billion-$2.71 billion

This compares to the year-ago loss of $0.31 per share and revenue of $2.61 billion. In the second quarter, the top- and bottom-lines came in at $0.30 and $2.4 billion, respectively.

Nio missed revenue expectations in each of the past four quarters and bottom-line estimates in two of the four quarters.

The Chinese EV maker reported in early October that it delivered a record 61,855 units in the third quarter, marking a 11.6% year-on-year increase and surrounding the guidance of 61,000-63,000 units.

Nio, which positioned itself in the premium market, forayed into the low-end with the launch of its first vehicle, named L60 under its affordable ONVO brand in mid-September. Deliveries of L60, a mid-size all-electric SUV began in late-September. 

In October, Nio sold 20,976 EVs, comprising 16,657 Nio-branded vehicles and 4,319 ONVO-branded EVs.

Nio shares have halved in the year-to-date period amid tough EV industry fundamentals in China. The lukewarm economic performance and price cuts, spearheaded by Tesla, Inc. ($TSLA) in China weighed down on domestic players.

NIO sentiment and message volume November 19, 2024, as of 2:25 pm ET | Source: Stocktwits

On Stocktwits, retail sentiment toward Nio stock was ‘neutral’ (48/100), reversing from the bullish mood that prevailed a day ago, but message volume picked up to ‘high’ levels.

A Stocktwits platform user attributed the stock weakness to general negativity toward China stocks and predicted Nio will drop down to $3.80 levels.

In late-October, Macquarie analyst Eugene Hsiao upgraded Nio from ‘Neutral’ to ‘Outperform’, with a $6.60 price target for the company’s NYSE-listed ADS. The analyst, however, said the company could potentially miss volume or sales expectations. 

He expects ONVO L60 sales to be meaningful in the fourth quarter.

Hsiao said the fourth-quarter guidance would be key for investors as they look ahead to strong uptake of L60. He is anticipating more details on the Firefly launch from the management on the earnings call. Firefly is the third brand the company plans to launch on Dec. 21 Nio Day.