What happened
Nio (NIO 9.08%) delivered its second-quarter results Wednesday morning, and though its losses increased, investors appeared to focus more on the report's positives: The stock spiked by as much as 7.4% in morning trading after an initial drop. As of 11:53 a.m. ET, Nio shares remained 3.3% above Tuesday's closing price.
Image source: Nio.
So what
For Q2, Nio reported sales of more than $1.5 billion, an increase of 21.8% over the prior-year period. That revenue was also almost 4% higher than it booked in the first quarter of 2022. But its losses grew substantially, which triggered the session's initial share price drop. Nio's net loss of more than $400 million was more than 50% higher than its loss in the previous quarter. But investors looked beyond the short-term headwinds that caused those growing losses and saw a better long-term outlook.
The second quarter included production slowdowns, supply chain challenges, and lower consumer spending stemming from several "zero COVID" lockdowns across China. But its vehicle sales still increased 21% year over year, showing the underlying business remains in growth mode.
Now what
Investors anticipate better results ahead, and Nio Chairman and CEO William Li described the second half of 2022 as "a critical period for Nio to scale up the production and delivery of multiple new products." Those new products include the ES7, a mid- to large-size SUV that contains the latest Nio technology system, and the ET5, its second sedan model.
Production of the ES7 began ramping up in August, and the ET5 will begin deliveries at the end of September. Nio also began exporting its larger, luxury ET7 sedan to Europe last month. Some investors saw the initial dip Wednesday morning as a buying opportunity, which helped move the stock back into positive territory once Nio's longer-term growth picture came back into focus.
