‘Don't Jump the Gun,' Says Investor About Nio Stock

Business Insider

3 days ago

Nio (NYSE:NIO) has long been viewed as one of China's most promising EV startups, but the company continues to struggle for footing in a market dominated by heavyweights like Tesla and BYD. Despite early promise, Nio remains unprofitable, and its sales performance – along with a pattern of missed revenue estimates in seven of the past ten quarters – underscores the challenges it faces.
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That trend continued with the company's Q1 2025 earnings report on Tuesday, which fell short on both the top and bottom lines. Revenue came in at $1.67 billion, missing expectations by $56.14 million, while EPS of -$0.42 was $0.05 below forecasts. Operating losses also widened, rising 19% year-over-year.
It wasn't all doom and gloom, however, as NIO's delivery of 42,094 EVs in Q1 2025 marked a 40.1% y/y increase. In addition, Q2 deliveries are projected to rise by 25.5% to 30.7% y/y, partly driven by the company's newly launched economy ONVO brand.
Could this be a sign that things are turning around for the beleaguered EV firm? While the widely-followed investor Bill Maurer sees potential, he is not quite ready to jump the gun just yet.
'The company seemingly has a solid growth story ahead of it, but it really needs to execute better,' the investor opined.
Maurer also pointed out that while the Q2 delivery outlook shows growth, it's not exactly a home run given the addition of new sub-brands. On top of that, Nio's revenue guidance for the current quarter came in below expectations, raising eyebrows at a time when analysts had already been lowering their forecasts.
'The Onvo ramp is doing much worse than expected, and margins are not improving fast enough to really limit large losses,' adds Maurer.
The investor's optimism is further dimmed due to the company's weakening balance sheet, as cash and investments fell from $5.7 billion to $3.6 billion during the past quarter. Maurer would therefore not be surprised to see more value-diluting capital raises coming up on the horizon.
'The balance sheet weakness along with the continued miss of previous growth targets has me a little skeptical currently,' concludes Maurer, who gives NIO shares a Hold (i.e. Neutral) rating. (To watch Maurer's track record, click here)
That seems to be the general opinion on Wall Street as well. With 2 Buy, 7 Hold, and 1 Sell recommendations, NIO carries a consensus Hold rating. That said, its 12-month average price target of $4.74 implies an upside of 26% from current levels. (See NIO stock forecast)
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