What happened
Chinese EV maker Nio (NIO 3.49%) reported yet another loss in its first-quarter report, but the stock is popping today anyway. Nio shares jumped as much as 12.3% Friday morning, but gave up much of those gains. As of 11:45 a.m. ET, Nio's American depositary shares were only higher by 1.5%.
So what
While vehicle deliveries in the first quarter rose increased 20.5% year over year, they decreased by 22% sequentially from the fourth quarter of 2022. But that information was already known from the company's delivery update released on April 1. Investors had sold that news, with the stock declining by more than 25% since that day.
The new financial information coming from the quarterly earnings report also wasn't great news, but the bottom line was better than analysts expected. Nio reported an adjusted net loss of $0.35 per share on revenue of nearly $1.6 billion. Wall Street analysts expected a net loss of $0.39 per share from sales of $1.7 billion. Total revenue increased 7.7% compared to the prior-year period.
With the stock already having dropped since first-quarter vehicle sales data was reported, investors initially cheered the annual revenue growth. But that positive sentiment didn't last.
Now what
That reversal was probably due to the fact that Nio's gross profit margin dropped all the way to 1.5% from 14.6% in the first quarter of 2022. While demand for EVs in China and Europe remains strong, Nio is struggling with higher labor and materials costs.
And things are getting worse in the current quarter. With two months of the period already in the books, Nio estimated that both vehicle deliveries and total revenue will be lower compared to the same period in 2022. That's not what investors in growth stocks want to see and helps explain why the stock couldn't hold its strong gains from earlier today.
