Chinese electric-vehicle maker NIO reports second quarter numbers before the market opens for trading Wednesday. Investors could use some good news.
NIO (ticker: NIO) American depositary receipts are down about 45% year to date, and off about 15% over the past month. Rising interest rates, rising tensions between the U.S. and China, and rising EV battery costs have all contributed to the ADRs’ decline.
Softer EV demand in China isn’t helping either. NIO peers Li Auto (LI) and XPeng (XPEV) have already reported second-quarter numbers. Both guided third-quarter numbers below Wall Street’s estimates.
Li expects to deliver about 28,000 vehicles in the third quarter. The company delivered almost 29,000 in the second quarter. XPeng expects to deliver about 30,000 vehicles in the third quarter. The company delivered about 34,000 vehicles in the second quarter. Investors, obviously, prefer to see sequential growth.
NIO delivered 25,059 vehicles in the second quarter. The company has delivered 20,729 in July and August combined. Wall Street is expecting about 17,000 units for September, according to the Bloomberg consensus estimate. That would be a record month for the company, but it could be a stale estimate—one that hasn’t been updated since other companies have reported numbers.
Along with guidance for the third quarter, Wall Street expects NIO to report a second-quarter loss of 18 cents per ADR on sales of $1.42 billion. In the first quarter the company lost 12 cents per ADR on sales of $1.56 billion.
Management hosts a conference call at 8 a.m. eastern time Wednesday to discuss results.
On the call, investors can look for an update on how individual models are selling, capacity expansion as well as the results of an internal investigation about NIO’s accounting. A short seller recently questioned how NIO accounts for its battery as a service business. NIO will allow car buyers to, essentially, buy an EV without the batteries. That lowers the upfront cost. Buyers then pay a monthly fee for the batteries.
The options markets imply ADRs will move about 6%, up or down, following earnings—similar to the volatility over the past four quarterly reports, and ADRs have declined following each of those four reports.