Nio share price rallies as Q3 deliveries pick up
Chinese EV manufacturer Nio saw share price exceed the four dollar mark this week, thanks to stronger Q3 updates.
Chinese electric car maker Nio Limited's share price is off to a good start this year, with stocks rallying to a seven-month high of US$4.20 per share on Monday (06 January).
This price increase is the likely result of an improved 2019 third-quarter, as well as a higher number of deliveries for the month of December 2019.
A breakdown of Q3 2019 results
Vehicle deliveries were 4,799 in Q3 of 2019, including 4,196 ES6s and 603 ES8s, compared with 3,553 vehicles delivered in the second quarter of 2019.
Vehicle sales were RMB1,733.5 million (US$242.5 million) in the third quarter of 2019, representing an increase of 22.5% from the second quarter of 2019 and an increase of 21.5% from the same quarter of 2018.
At the start of this week, the company also provided another investor update, reporting a total of 3,170 vehicle deliveries for the month of December 2019.
This represents a 25.4% month-over-month growth, which the company attributed to strong sales of both the ES6 (2,537 units) and the ES8 (633 units). As of December 31, 2019, aggregate deliveries of the ES6 and the ES8 reached 31,913 vehicles, of which 20,565 were delivered in 2019.
Share price revisions
Thanks to this latest stretch of good news, Nio’s share price performance thus far this year has already exceeded the highest price recorded in the final three months of 2019.
William Bin Li, founder, chairman and chief executive officer of NIO, says he expects the company’s order momentum to ‘continue going forward’, with its product offerings ‘further deepened and upgraded in 2020’.
He is also confident that despite a ‘soft auto market’, the smart premium EV sector will outperform the industry in its growth rate in the foreseeable future.
The optimistic outlook has prompted Bank of America Securities analyst Ming-Hsun Lee to reiterate his rating on the stock at ‘neutral’. He also increased the price target from US$3.80 to US$3.90.
‘While we believe the stock's fundamentals have bottomed out, the current valuation partially factors in the improved sales momentum. Thus, we reiterate our “neutral” rating on NIO,’ said Hsun.
Similarly, investment banks Piper Jaffray and Goldman Sachs also reiterated their ‘neutral’ stance.
On the other hand, Bank of America Merrill equity researchers revised their ratings on the stock from ‘underperform’ to ‘neutral’ based on a December 31 report.
Caution for the rest of 2020
Still, it might be too early to call the Q3 and December results a victory, as headwinds are starting to pick up again for the company, with Tesla ramping up its local output in 2020, and overall 2019 car sales in China down 7.5% - the second straight year of decline.
The China Association of Automobile Manufacturers (CAAM) last month also predicted that nationwide vehicle sales will fall two percent to 25.3 million units in 2020.
Add to that, the Chinese electronic vehicle (EV) market is still feeling the effects of a slump, with EV sales down 43.7% in November 2019, according to CAAM data.
It was also only in November 2019 that share price of the Shanghai-based manufacturer was on a rapid decline on the back of mounting losses.
Share value had fallen to a record-low of US$1.52 per share that month, a stark contrast from the US$9.90 price tag that it launched with in September 2018.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Act on share opportunities today
Go long or short on thousands of international stocks with spread bets and CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All share prices are delayed by at least 15 minutes.