Nio Shares Rally on Upbeat Forecast After Q3 Loss Widens

_{Source: Predictions based on analysts' consensus from Visible Alpha}

Nio Financial Results: Analysis

Nio Inc. (NIO) shares rallied more than 10% from a two-year low after the Chinese maker of electric vehicles (EVs) issued an upbeat outlook for fourth-quarter vehicle deliveries—even as third-quarter results trailed estimates amid mounting battery and overhead costs.

Nio, an upstart producer of luxury EVs, posted an adjusted quarterly loss of 2.11 yuan (29 cents) a share, compared with the 1.02-yuan loss expected by analysts tracked by Visible Alpha. Revenue rose almost 33% year-over-year to 13 billion yuan, also short of torecasts.

“We achieved solid top-line growth in the third quarter of 2022 against a challenging market environment,” Nio CFO Steven Wei Feng said in a statement.

Nio's Q4 Outlook

The company said it expects to deliver 43,000 to 48,000 vehicles in its December-ending quarter, which started with 10,059 autos in October. Nio hassaid October's production and delivery volumes suffered from "operation challenges" at its plants as well as supply chain issues resulting from strict regional Chinese restrictions tied to the pandemic.

Nio also projected fourth-quarter revenue of 17.4 billion yuan to 19.2 billion yuan, representing an annual Q4 growth rate of 75% to 94%.

Battery, Overhead Costs Soared in Q3

Nio's third-quarter cost of sales was up 44% year-over-year and 26% sequentially from the second quarter. The company cited higher delivery volumes and escalating battery costs. Research and development costs more than doubled year-over-year and rose 37% from Q2, while selling, general and administrative expenses rose 49% year-over-year and 19% from Q2. Nio cited increased spending on personnel and marketing, attributable in part to the rollout last month of its sales and service operations in Europe.

On an adjusted basis excluding stock-based compensation costs, Nio lost 29 cents for every dollar of sales in the third quarter.