Shares of the Chinese electric automaker Nio (NIO 1.61%) plunged today after the company reported its fourth-quarter results. As a whole, the company performed well in the quarter, but investors appeared to be disappointed with management's estimates for first-quarter vehicle deliveries.
Nio's management said that the company will deliver between 25,000 to 26,000 vehicles in the first quarter, compared to Wall Street's consensus estimate of 28,000 for the quarter.
The result? The EV stock took a 9.5% haircut today. So, why do I think investors are overreacting? Because the rest of the company's quarterly results were still good.
Image source: Nio.
First, consider that Nio's vehicle revenue jumped 49% in the fourth quarter and soared 119% for the full year. Not too shabby considering supply chain constraints are putting pressure on automakers and a chip shortage continues to affect production in the auto industry.
Speaking of vehicle production, Nio put up impressive figures on that front as well. Vehicle deliveries increased 44% in the fourth quarter, reaching 25,034. And for the full year 2021, deliveries increased an impressive 109% year over year to 91,429.
Still, some investors will point out that if the company reaches the midpoint of vehicle delivery guidance -- about 25,500 units -- for the first quarter, it'll mean that the deliveries increase by 27% from the year-ago quarter.
Sure, it might be nice to see deliveries ramping up faster than that. But consider what Nio CEO William Li said on the earnings call: "On the side of supply chain, we are still faced with the challenges of growing chip supply volatility, raw material costs increase, COVID, and ... the changing international situation."
In short, there's a lot for a younger EV company to be balancing right now as it grows. And yet, Nio is growing -- and fast. The company's sales and vehicle deliveries in the fourth quarter proved that.
All automakers are facing some hiccups right now when it comes to production, and Nio investors shouldn't ding the company too much for an industrywide problem. There's plenty of time for Nio to rebound from supply chain issues and a semiconductor shortage -- and long-term investors will be glad that they held on to their Nio shares when that happens.
