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Nio share price up 3.63% as Q1 results beat Wall Street expectations

The group posted an adjusted net loss of 2.42 Chinese yuan per share, an improvement from the net loss of 3.20 Chinese yuan per share in the preceding quarter.

Chinese automotive firm Nio on Tuesday posted better-than-expected results for the first fiscal quarter ended March, driving its stock higher by 3.63%.

Net revenue for the first financial quarter came in at 1.63 billion yuan, which was better than the 1.5 billion yuan analysts had expected. For the fourth quarter, the group had reported a net revenue of 3.44 billion yuan.

The group posted an adjusted net loss of 2.42 Chinese yuan per share, an improvement from the net loss of 3.20 Chinese yuan per share in the preceding quarter. The losses were far lower than the 3.23 Chinese yuan per share in net loss experts had predicted.

Nio share price

Investors reacted positively to Nio’s better-than-expected first quarter performance, and the stock rose by 3.63% or US$0.14, at US$4.00, at the close on Tuesday. After-hours trading saw its shares rising by 0.50% or US$0.02, at US$4.02, at around 2.30am Eastern Time.

Year-to-date, the group’s shares have fallen by 35.48%, from the price of US$6.20 on January 2, 2019. Nio’s stock had experienced a steady ascend in its prices for the first few months of this year, with it reaching as high as US$10.16 in March, but the uptrend was short-lived.

In its fourth quarter earnings announcement on March 5, the group announced plans to cancel its Shanghai-based car manufacturing plant and to continue to outsource its car manufacturing to JAC Motors. The announcement triggered a massive sell-off, which led the group’s shares to fall by 20% in a day.

Nio earnings report highlights

The firm said it delivered 3,989 ES8 cars for the first quarter, which was the amount it had previously reported in a press announcement in April.

Nio said the deliveries for its ES8 in April this year reached 1,124 vehicles, reflected by a ‘greater-than-anticipated slowdown in monthly deliveries primarily due to the electric vehicle (EV) subsidy reduction announced in late March’ as well as the ‘slowdown of macro-economic conditions in China which has been exacerbated by the United States-China trade war’.

From January to April, China’s automotive sector was in the doldrums, as its wholesale passenger vehicle sales fell 15% from a year ago.

Going forward, the group plans to reduce on research and development spending and make a 4.5% cut to its workforce, Nio’s founder and chief executive William Li said in the firm’s earnings conference call on Tuesday morning, reported TechCrunch.

Nio’s chief financial officer Louis T Hsieh said in the earnings statement: ‘Looking ahead to the second quarter, we expect an even more challenging sales environment and anticipate overall sequential demand and deliveries to decrease, as competition continues to accelerate and the general automobile market in China remains muted,’

‘Against this backdrop, Nio is focusing on rolling out our ES6 nationwide, and at the same time, improving overall network utilization and operating efficiencies,’ he added.

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.

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