Tesla’s biggest Chinese competitor surges 35% after losing less money than expected last quarter

  • Nio, Tesla’s chief competitor in China, reported 2019 fiscal third-quarter earnings Monday that beat analyst expectations and showed a smaller-than-anticipated loss.
  • Shares surged as much as 35% in early trading Monday.
  • The company delivered more vehicles than analysts expected, boosting quarterly revenue. It also reported a narrower-than-anticipated loss for the quarter.
  • Watch Nio trade live on Markets Insider.

Shares of Nio, the electric automaker that is Tesla’s biggest competition in China, rose as much as 35% in early trading Monday after the company reported 2019 fiscal third-quarter earnings that handily beat analyst estimates and showed a smaller loss than expected.

Here’s what the company reported, versus what analysts surveyed by Bloomberg expected:

  • Revenue: 1.84 billion yuan reported, versus 1.74 billion yuan (expected)
  • Adjusted loss per US depositary receipt: 2.38 yuan reported, versus 2.51 yuan (expected)

The company reported a 35% increase in vehicle deliveries from the second quarter of 2019, showing that there is a higher demand for the electric cars than previously thought. In the fiscal third quarter, Nio delivered 4,196 of its cheaper model ES6 and 603 of the model ES8 for a total of 4,799 vehicles.

Those vehicle sales brought in 1.7 billion yuan ($242.5 million) in the third quarter, a 22.5% increase from the second quarter and a 21.5% increase from the same quarter a year ago.

“The electric vehicle sector experienced substantial softness in the second half of 2019 after the reduction of EV subsidies in China. Despite the challenges, NIO’s sales improved solidly since September,” William Bin Li, CEO of NIO, said in a press release.

Going forward, Nio expects to deliver 8,000 vehicles in the fourth quarter, bringing total aggregate deliveries in fiscal 2019 to more than 20,300. The company expects total revenues to be approximately 2.8 billion yuan ($393.2 million), a 53% increase from the third quarter.

Despite the rosy results, the company said in its earnings release that it operates with “continuous loss” and negative equity. In addition, Nio said that it does not have sufficient cash to provide “the required working capital and liquidity for continuous operation in the next 12 months,” but is working on on “several” financing projects.

In a December 29 interview with Bloomberg News, Li said that the company’s cost-cutting effort is underway and that it expects a further reduction in the first quarter of fiscal 2020.

Nio is down 62% year-to-date through Friday’s close.

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Markets Insider