Nio (NIO 4.31%) shares had been on a bit of a roll over the last two weeks, but that run just hit a wall. Yesterday's drop came after a Chinese competitor provided its quarterly report Monday and its president warned that the second quarter has become more challenging. Nio shares continued to fall in reaction early today, lower by as much as nearly 4%. But it subsequently recovered as investors focused on more positive news. As of 11:06 a.m. ET, Nio shares were higher by 0.4%.
Mizuho Securities analyst Vijay Rakesh hosted an event with Nio management on Monday, and noted that production delays are beginning to reverse as the supply chain begins to recover from Chinese lockdowns aimed at breaking a recent wave of COVID-19 infections. That helped to offset a mixed report from fellow Chinese electric vehicle (EV) maker XPeng.
2022 is off to a strong start for XPeng, and that bodes well for Nio's first-quarter results, which will be reported June 9. XPeng reported first-quarter revenue that jumped 153% from the year-ago period, but dropped sequentially from the 2021 fourth quarter. Those results beat analyst expectations, but the company's forecast for second-quarter sales fell short.
Xpeng estimates second-quarter revenue will be in the range of about $1 billion to $1.12 billion. That is short of the approximately $1.2 billion expected by analysts, according to FactSet Research.
That potential shortfall hit Nio shares yesterday as well. But analyst Rakesh took the more optimistic longer-term view of the situation. "With light at the end of the tunnel for Shanghai lockdowns, Nio appears on track for L-T [long-term] growth with its premium EV leadership, EU/global expansion underway, and mass market brand launch in 2024E," Rakesh said, according to Yahoo! Finance.
That view is likely what investors latched onto today as the stock rebounded from its early morning drop. Nio is at the start of a major geographic footprint and production expansion, and some investors are looking ahead to when near-term supply chain challenges subside.