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NIO’s Q4 Earnings Results: Highlights for Investors

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NIO’s fourth-quarter earnings

After the market closed on March 5, NIO (NIO) released its fourth-quarter earnings. The company reported an adjusted net loss of 3.20 Chinese yuan (or $0.47) per share in the fourth quarter—much better than the loss of 10.35 yuan per share in the previous quarter. The loss per share in the fourth quarter was better than the loss of 71.47 yuan per share in the fourth quarter of 2017. However, the lower loss wasn’t enough to make investors happy. NIO stock fell sharply after its earnings release on March 5.

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NIO’s earnings report

In the fourth quarter, NIO’s revenues rose ~134% on a sequential basis to 3.4 billion yuan (or $499.7 million). A solid 144% positive sequential increase in the company’s car delivery growth in the fourth quarter helped boost the revenues. NIO’s fourth-quarter revenues were also better than analysts’ estimates of 2.9 billion yuan.

NIO also managed to bring its gross margin into the positive territory. NIO reported a gross margin of 0.4% in the fourth quarter. In the previous quarter, the company reported a negative gross margin of -7.9%.

NIO shocked investors by saying that it isn’t planning to build its own car manufacturing plant in Shanghai. In the fourth-quarter earnings report, NIO said that it’s “pending signing of definitive termination agreement” of the Shanghai-based factory.

NIO stock fell

Despite NIO’s gross margin entering the positive territory and better-than-expected revenues in the fourth quarter, its plan to cancel the construction of the Shanghai-based manufacturing plant hurt investors’ sentiments. On March 6 at 8:05 AM EST, NIO stock fell ~18.0% in the pre-market trading session.

As of March 5, NIO has risen 59.5% YTD (year-to-date). Other auto companies including General Motors (GM), Ford (F), Fiat Chrysler (FCAU), Toyota (TM), and Honda (HMC) have risen 17.4%, 14.6%, 1.4%, 1.9%, and 4.3% YTD, respectively. In contrast, Tesla (TSLA) has lost ~16.9% in 2019.

Chinese companies (MCHI) including Baidu (BIDU), Alibaba (BABA), Tencent Holdings (TCEHY), and Uxin (UXIN) have risen 5.8%, 35.0%, 18.0%, and 6.0% YTD, respectively.

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