What happened
Shares of Niu Technologies (NIU) were sliding today after the Chinese electric scooter maker posted disappointing results in its third-quarter earnings report. The company also offered underwhelming guidance for the fourth quarter.
The stock was down 11.6% as of 12:08 p.m. EDT on Monday.
A Niu E-scooter. Image source: Niu Technologies.
So what
Niu, which had previously reported better-than-expected sales volumes for the third quarter, said that revenue in the period rose 36.7% to $135.8 million, well below analyst estimates at $149.3 million. Units sold were up 68% to 250,000, but revenue growth was slower since much of the increase came from the recently introduced lower-priced G0 model. The G0 rollout also led gross margin to fall from 22.2% in the year-ago quarter to 20.9%, but sales and marketing expenses fell in the period, helping the company gain leverage on operating expenses.
As a result, adjusted earnings per share rose from $0.13 to $0.17, but that was short of the consensus at $0.22.
CEO Yan Li said: "We are very pleased to see the strong sales growth in China during the third quarter. Our China sales volume increased by 70% year over year driven by new products launched earlier this year and retail network expansion."
Now what
Looking ahead, management called for revenue growth of just 5% to 15% in the fourth quarter, a sharp slowdown from earlier in the year, though it explained the company is lapping last year's fourth quarter, when it experienced strong sales of accessories and spare parts to ridesharing operators.
Due to the COVID-19 pandemic, the ridesharing business has been weak this year, so sales will decline in that category, though that appears to be a one-time headwind. Management also said it expected lower average sales prices in the fourth quarter, but solid volume growth, continuing the trend from the third quarter. It also plans to introduces the lower-priced Gova model in Indonesia before the end of the year.
Given that Niu's results missed estimates and guidance was weak, it's not surprising to see the stock falling today. Still, the company offers a unique opportunity in the electric vehicle (EV) market through the fast-growing micromobility segment, and trades at a lower valuation than popular EV stocks like Tesla (TSLA -2.54%) and NIO (NIO 3.59%). EV investors should at least keep an eye on the stock, especially as it moves past a challenging quarter.
