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Could NIO Beat Its Q1 Estimates like TCEHY and BABA?

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May. 24 2019, Updated 12:54 p.m. ET

NIO’s Chinese peers reported earnings

Last week, Alibaba (BABA), Tencent Holdings (TCEHY), and Baidu (BIDU) reported their results for the quarter ending in March. Tencent Holdings reported an EPS of $0.32, which is in line with analysts’ expectations. During the first quarter, Alibaba’s EPS of $1.25 beat analysts’ estimate of $0.95. In contrast, Baidu posted an EPS of $0.40, which missed analysts’ estimate of $0.45. Now, we’ll discuss what analysts expect for NIO’s (NIO) first-quarter earnings.

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NIO’s earnings in the fourth quarter of 2018

In the fourth quarter of 2018, NIO reported an improvement in its adjusted net loss per share to ~3.20 Chinese yuan compared to 10.35 yuan in the third quarter of 2018 and 71.47 yuan in the fourth quarter of 2017.

During the fourth quarter earnings event, NIO announced the cancelation of its Shanghai-based car manufacturing plant. The company plans to continue outsourcing its car manufacturing to JAC Motors. The news triggered a massive sell-off in NIO stock. The stock fell 20.9% on March 6—the day after the earnings announcement.

Analysts’ estimates

According to data compiled by Thomson Reuters, analysts expect NIO’s net losses to increase in the first quarter. The company is expected to report an adjusted net loss of 3.23 Chinese yuan per share in the first quarter, which is worse than its net loss of 3.20 yuan per share reported in the previous quarter.

A decline in NIO’s car deliveries in the first quarter and increased costs due to the ES6 electric car ramp-up process could hurt its first-quarter results.

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