What happened
Share of the Chinese electric vehicle (EV) maker Nio (NIO +1.61%) hit the accelerator today after the company reported its third-quarter results. While Nio's top-line results failed to meet Wall Street's consensus estimates, investors instead focused their attention on management's guidance for impressive fourth-quarter vehicle deliveries.
As a result, the EV stock was up by 12% as of 10:56 a.m. ET.
So what
Nio reported a non-GAAP (adjusted) loss per American depositary share of $0.30 in the quarter, which was much lower than analysts' consensus estimate of a loss of $0.16 per share.
Image source: Nio.
Nio's revenue did beat expectations, though. The company's sales rose 32.6% to 13 billion yuan ($1.83 billion) in the quarter and came out slightly ahead of Wall Street's average estimate of about 12.9 billion yuan ($1.8 billion).
The company's vehicle deliveries grew at a healthy pace as well, increasing 29.3% from the year-ago quarter to 31,607 -- a new record for Nio.
The company's founder and CEO, William Bin Li, said in prepared remarks that the company has "witnessed strong growth momentum in user demand and robust foot traffic" especially after the debut of its ET5 vehicle in stores in September, and that it expects the car to "support a substantial acceleration of our overall revenue growth" in the fourth quarter.
Nio's management said the cost of sales increased by 44.2% in the quarter to 11.27 billion yuan ($1.58 billion) which was "mainly driven by the increase of delivery volume and higher battery cost per vehicle." The result weighed on the company's gross margin, pushing it down to 13.3% from 20.3% in the year-ago quarter.
NYSE: NIO
Key Data Points
But investors weren't exactly interested in Nio's top- and bottom-line results, or its margins.
Instead, they focused their attention on the fact that Nio's management said vehicle deliveries in the fourth quarter will be between 43,000 and 48,000 -- representing a nearly 82% increase at the midpoint of guidance.
That increase could bring another record quarter of deliveries for Nio, and investors responded by sending the company's share price higher this morning.
Now what
Nio issued sales guidance for the fourth quarter in the range of 17.37 billion yuan ($2.41 billion) to 19.23 billion yuan ($2.67 billion), which is below analysts' consensus estimate of 21.78 billion yuan ($3 billion).
But with the company's strong delivery estimates for the fourth quarter, Nio investors are content to dwell on the fact that the company is continuing to ramp up production even as some parts of China face ongoing COVID-19-related lockdowns.
