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Nio blames the loss on “cost volatilities” caused by Covid-19 shutdowns in China during April and May. That situation hurt production capacity as well as the suppliers the Shanghai-based company depends on.
Before today, NIO stock had declined 49% this year to trade at $17.11 per share. Here’s what investors should know about shares moving forward.
What’s Happening With NIO Stock?
In an earnings statement, Nio reported Q2 revenues of $1.54 billion, which came in greater than the $1.31 billion the company announced the same time a year earlier. However, Nio also reported an adjusted loss per share of 20 cents, which was much bigger than the 3 cent loss it announced in Q2 2021.
Wall Street analysts who cover NIO stock had forecast that the company would report Q2 revenues of $1.4 billion and an earnings per share (EPS) loss of 17 cents for the period. In all, the EV company recorded a net loss of $409.8 million, an increase of 316% from the same period a year ago.
Why It Matters
For Q2, Nio also announced that it had cash on hand of $8.1 billion at the end of the period, down from the $8.4 billion it had at the end of Q1 2022. Gross margins in Q2 were 13% as well. That’s much lower than the 14.6% gross margin the company reported between January and March of this year.
Nio’s poor results show the damage that China’s ongoing “zero tolerance policy” towards Covid-19 has caused in the country’s manufacturing sector and its impact in the automotive industry. However, with production now back in full swing, Nio expects to deliver between 31,000 and 33,000 vehicles in Q3. It also expects to generate revenues between $1.9 billion and $2 billion for the upcoming quarter.
NIO stock took a hit this morning after the company released the disappointing second-quarter results. Today’s decline exacerbated the downward trend in Nio’s share price, which has been slumping alongside the broader market throughout 2022.
Of course, lockdowns are beyond the control of management. But the initial reaction to the company’s poor Q2 results does show that investors are not in the most forgiving mood. That said, shares are now slightly back in the green as of this writing.
On the date of publication, Joel Baglole did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.