What happened
Shares of Nio (NIO 2.56%) fell by as much as 14.2% in early trading Tuesday, according to data provided by S&P Global Market Intelligence, then largely recovered to trade down 2.3% as of 2.50 p.m. ET. The Chinese electric vehicle company reported weaker-than-expected second-quarter results, but management did offer solid guidance on revenue and deliveries.
So what
Nio's revenue declined 14.8% year over year in the quarter to $1.21 billion -- below analysts' consensus estimate of close to $1.26 billion -- and vehicle sales revenue decreased 24.9% to $990.9 million. That resulted in an adjusted net loss of $751 million, or $0.45 per American depositary share (ADS), missing expectations for an adjusted net loss of $0.41 per ADS.
Nio delivered 23,520 vehicles in the second quarter. However, in July (the first month of Q3), it delivered 20,462 vehicles, up 103.6% year over year.
Now what
Nio founder, Chairman, and CEO William Bin Li stated the company expects "solid growth in vehicle deliveries in the second half of 2023," driven by the product transition based on its new NT2.0 Platform, the expansion of its power network, and its increased sales team headcount.
More specifically, for the third quarter, Nio expects to deliver between 50,000 and 57,000 vehicles, up 74% to 80.3% year over year. On the top line, that should translate to revenue of between $2.606 billion and $2.692 billion, up 45.3% to 50.1%. Both ends of that guidance range are above analysts' consensus expectation for third-quarter revenue of $2.476 billion.
While the market generally hates being told to hurry up and wait for growth to materialize, the combination of that solid outlook and a broader market rally Tuesday helps explain Nio's afternoon rebound. If Nio can indeed fulfill its delivery guidance for the third quarter, that momentum might well be positively reflected in its share price over the coming months.
