NIO Reports $700 Million Net Loss in Q1

Shares of Chinese electrical vehicle (EV) company NIO Limited have beenpunished over the past six months, falling 17% YTD. The company's inabilityto grow its vehicle delivery rate has alienated investors, which areconcerned that larger EV automakers such as Tesla have begun to squeezeNIO's profit margins particularly in its own Chinese market.

The U.S.-listed shares of NIO Inc. dropped Friday, after the China-basedelectric vehicle maker reported first-quarter revenue that missedexpectations, amid a decrease in average selling prices, and warned of abig miss in the current quarter.

NIO’s losses have widened, but beat expectations, while gross margincontracted. In its unaudited financial result on Friday NIO reported a netloss attributable to ordinary shareholders of US$699.5 million in Q1 2023,up from its net loss of $287.9 million in the prior year.

For the quarter vehicle sales were $1.34 billion falling 37.5% from Q42022. NIO said the sales took a dive along with a drop in delivery volumeand average selling price of its EVs.

Total revenues in the first quarter of 2023 were US$1.55 billion (wellbelow consensus), representing an increase of 7.7% from the first quarterof 2022 and a decrease of 33.5% from the fourth quarter of 2022. For thesecond quarter of 2023 total revenue is expected to come between $1.27-1.36billion.

NIO delivered 31,041 vehicles in the first quarter of 2023. For the secondquarter of 2023, the company expects deliveries to be between 23,000 and25,000 vehicles, down from 25,768 a year earlier.

Source: Tradingview

The share price rallied on Friday as results came better than feared. Whilethe current rebound could extend a bit further, it is likely to turn out tobe short-lived. The RSI indicator has been firmly in the bear market rangesince October 2021 and at this juncture in time there are no signs ofpicking up. Until the leading RSI indicator remains below the current60%-70% range, the primary down trend is intact and it’s premature tospeculate about a turnaround.

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