NIO’s Fourth-Quarter Earnings Surprise Analysts. This Is Why

A Chinese electric vehicle maker, Nio Inc. (NYSE: NIO), released fourth-quarter results; although sales rose modestly, Nio posted a larger-than-expected loss. As a result, Nio stock was lower on Friday morning, with Nio providing bearish guidance for the first quarter.

The news comes as China’s economy continues to slump, and there is mounting pressure on companies to turn profits to keep investors happy.

While Nio performed well, it is likely that some of the softer numbers, such as higher employee training costs and increased marketing expenses, were due to factors beyond Nio’s control.

Wall Street predicted the Chinese electric vehicle startup would lose 14 cents this year, compared with 16 cents per US deposit last year.

FactSet reports that revenue increased 49% year-over-year to $1,532 million. Sales growth would decline for the third straight quarter. It would be less than the 122% increase in third-quarter revenue.

Nio is down 16 cents from a year ago and was unchanged from a year ago. Revenue grew 52% to $1.55 billion.

Nio expects to ship between 25,000 and 26,000 vehicles in the first quarter. According to this forecast, the number of electric cars sold in March will range from 9,200 to 10,200. Nio sold 9,652 cars in January and 6,131 in February during Chinese New Year.

Worldwide shortages in supplies and chip manufacturing have crippled Nio’s output and led to lower fourth-quarter sales. In the first two months of this year, Nio was overtaken by Xpeng (and Li Auto). China is the most prominent electric car market in the world. Nio and its EV startup partners are threatening Tesla (TSLA).

Nio’s stock has dropped sharply over the past year as it is now above its 21-day exponential moving average and close to resuming its 50-day average. Additionally, recent difficulties have seen the 200-day average fall below the short-term 21-day and 50-day averages.

However, analysts remain confused about the company’s long-term future as it struggles to profit from electric vehicles. But some analysts believe China’s EV inventory will rise more than twice.

Chinese electric vehicle sales increased in 2021, re-establishing China as the primary market for electric vehicles.