Shares of Chinese electric-vehicle maker NIO (NYSE:NIO) dropped sharply on Tuesday morning, after the company released long-delayed second-quarter earnings results that missed estimates and called its future into question.
As of noon EDT, NIO's American depositary shares were trading down about 24% from Monday's closing price.
NIO delayed the release of its second-quarter earnings until today, amid rumors that the company was running low on cash. Those rumors were justified: NIO posted a loss of 3.3 billion yuan ($478.6 million), far worse than Wall Street's consensus expectation of a 2.6-billion-yuan loss as reported by Bloomberg.
More to the point, NIO said it had just $503.4 million in cash and equivalents remaining as of June 30, down from $1.12 billion just three months prior. Costs related to the launch of its new electric SUV, the ES6, were partly responsible -- but an ongoing sales slump was also an important factor, and that slump continued into the third quarter.
NIO said that its sales picked up in August, as production of the ES6 ramped up. And it's raising $200 million from Tencent Holdings and CEO William Bin Li, which will help. But with China's new-car market still weak, and Tesla just a few months away from opening its new Shanghai factory, the company still faces questions about whether it can survive for much longer.
Alas, those questions weren't answered on Tuesday: In a move that probably contributed to the sell-off, the company abruptly canceled its earnings conference call.
NIO and its investors have to hope that the $200 million cash infusion gives the company enough breathing room to get production of the ES6 up to full speed -- and that customers continue to buy them. The company's third-quarter guidance calls for gains in both revenue and deliveries versus the second quarter: If it can deliver on those expectations, its chances of survival should look a bit better than they do now.