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NIO Posts Record May Deliveries: Blue Skies Ahead for the Stock?

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Today, NIO (NYSE:NIO) announced its May delivery numbers. The company delivered 3,436 vehicles in May. The number implies an increase of 215% YoY (year-over-year)—record-high monthly deliveries for the company.

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NIO’s record May deliveries

During the press release, William Li, NIO’s CEO and chairman, said, “In May, we achieved record-high monthly deliveries in our history. We truly appreciate the trust and support that NIO users have been giving us and we remain fully committed to the vision of building the best user enterprise by offering high-quality premium smart electric vehicles in the years to come.” The company also reiterated its confidence in its delivery goal for the second quarter of 2020.

Implied June deliveries to remain strong too

Notably, NIO also delivered strong YoY and monthly growth in its delivery numbers in April. Li thinks that the worst of coronavirus impact on the company is over. During the company’s first-quarter results, management reiterated its expectation of a positive gross margin for the second quarter and a double-digit vehicle gross margin by the end of the year. Going by the mid-point of the guidance and the delivery numbers in April and May, the June deliveries should be 3,169. The June deliveries would imply a growth of 136% YoY.

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NIO’s strong consecutive deliveries

Two consecutive months of strong deliveries cement the demand returning theory rather than just pent up demand driving the sales. Due to strong deliveries, solid first-quarter results, encouraging guidance, and the recent financing deal struck by the company, many analysts have started turning around for the company.

Goldman Sachs upgrades NIO

Meanwhile, NIO stock has seen three stock upgrades in less than a month. On June 2, Goldman Sachs upgraded the stock from “neutral” to “buy.” Goldman Sachs analyst Fei Fang thinks that the company’s liquidity risks have reduced. He also thinks that consumers recognize NIO as an emerging brand. NIO stock gained 19% in a single day due to Goldman Sachs’s optimism. Previously, J.P. Morgan and Bank of America also upgraded the stock.

Stock’s brilliant rally

Now, NIO stock has risen a whopping 46% in the last four trading days. The stock rallied due to the company’s first-quarter results, strong second-quarter guidance, Li’s assurances regarding the company’s cash situation, and analysts’ upgrade. Notably, the stock was up 5.7% at 8:10 AM ET in pre-market trading. Continued strong demand for NIO’s products and progress towards cash self-sufficiency should help the stock reach even greater heights. Overall, the future looks bright for the company.

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