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Nio's Q3 Loss Beat Expectations. But Q4 Probably Won't

By John Rosevear – Nov 10, 2021 at 5:31PM

Key Points

  • Nio's third-quarter revenue and loss both beat analyst expectations.
  • Management warned that supply-chain issues will last a while longer.
  • But the company has plenty of cash, and future-product programs are on track.

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Its fourth-quarter guidance wasn't what Wall Street hoped to see.

Chinese electric vehicle maker Nio (NIO -6.44%) reported a loss for the third quarter that was narrower than Wall Street had expected, on good sequential and year-over-year sales growth despite a series of manufacturing challenges. 

On an adjusted basis, excluding share-based compensation, Nio lost $88.4 million in the third quarter, or $0.06 per share, on revenue of $1.52 billion. Wall Street analysts polled by Thomson Reuters had expected an adjusted loss of $0.09 per share on revenue of $1.46 billion, on average. 

But the news wasn't all good, as the company warned that ongoing supply chain woes will likely limit its sales growth through the end of the year and into 2022. 

Highlights of Nio's third-quarter results

  • Nio delivered 24,439 vehicles in the third quarter, roughly double its year-ago result and up from 21,896 in the second quarter of 2021. (But it noted that it delivered just 3,667 vehicles in October, as its factory's production lines were being revamped ahead of the introduction of the new ET7 sedan.)
A white Nio ET7, a sleek upscale electric sedan.

Nio took factory downtime in October to prepare for the launch of the ET7 sedan, expected early next year. Image source: Nio.

  • Nio's "vehicle margin," the gross margin from its sales of new vehicles, was 18%, down from 20.3% in the second quarter but up from 14.5% in the third quarter of 2020. 
  • Nio bought back more of the equity it gave up as part of a bailout deal with economic-development authorities in April 2020. As part of that deal, Nio agreed to place all of its in-China assets in a subsidiary called Nio China, in which the authorities received a 24.1% stake in exchange for about $1 billion in cash. Nio's success since the bailout has allowed it to buy back portions of that stake; as of the most recent transaction in September, it now owns 92.114% of Nio China. 
  • Nio announced an ongoing at-the-market secondary stock offering on Sept. 7. Through Nov. 9, it had raised about $1.2 billion via that offering. 
  • Nio had about $7.3 billion in cash and equivalents as of Sept. 30, and about $1.5 billion in long-term debt.

What Nio's CEO had to say

CEO William Bin Li said supply chain issues, including a global shortage of automotive-grade semiconductors, will continue to be an issue in the fourth quarter and into next year. 

But Nio's future products, including (importantly!) the three new vehicles expected in 2022, remain on track as of now, Li said.

Supply issues tempered Nio's fourth-quarter guidance

Nio said that while demand for its vehicles remains strong, auto investors might see a small sequential decline in deliveries in the fourth quarter, due to ongoing supply chain issues and to the factory downtime that crimped October's output.

Specifically, investors should expect:

  • Vehicle deliveries between 23,500 and 25,500. (Q4 2020: 17,353.)
  • Total revenue between $1.455 billion and $1.568 billion. (Q4 2020: $1.017 billion.)

John Rosevear has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends NIO Inc. The Motley Fool has a disclosure policy.

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