Analysts revalue key Tesla rival after earnings
It took Tesla 17 years to become fully profitable. Will it take more or less time for this competitor?
William Bin Li would now not build rocket ships or robots, but believers agree with his Nio the “Tesla of China.”
Li grew up in a village in a rural area in Anhui, China. The village had no electricity until he was once in highschool. And now, Li aims to toughen the battery charging network across less affluent areas in China.
On August 20, 2024, Nio launched its "Power Up Counties" initiative to extend its charging and battery-swapping infrastructure to all county-level administrative divisions, providing a more convenient power solution for EV users.
Perhaps surprisingly, Nio also manufactures a high-end smartphone unveiled last September, priced between 6,499 and 7,499 yuan ($890-$1,030). The smartphone is designed to integrate with its electric vehicles, offering features equivalent to allowing users to park their cars by way of the phone.
“William Li is a pioneer. He is effectively China’s Elon…if we are taking a look at branding, taking a look at bold moves,” said Tu Le, founder of Beijing-based advisory company Sino Auto Insights, Financial Times reported.
Related: Analyst unveils bold 'Apple-esque' Tesla stock forecast
After co-founding the automobile comparison websites Bitauto in 2000 and achieving success, Li founded Nio in 2014. He saw tremendous potential the whole way during the electric vehicle industry and chose the name Nio, which implies that "blue sky coming" in Chinese.
In September 2018, Nio was once listed on the New York Stock Exchange at $6.28 with a market value of over $6 billion.
Tesla achieved its first full-year profit in 2020, 17 years after its founding in 2003. That year, Tesla sold 499,550 cars, whereas Nio delivered 43,728 vehicles over the same period.
It’s been a decade since Nio was once founded and 6 years since it went public, and Nio still hasn’t made a profit yet. NurPhoto/Getty Images
Nio narrows losses, plans to enter the U.S. market
Nio’s (NIO) shares popped 14% after it reported a narrowed loss for the second quarter.
The company reported a loss of 30 cents per share on $2.Four billion in revenue for the quarter ended June 30, a bit bit beating analysts' expectation of a 31-cent per share loss on the same revenue, in step with FactSet. Nio posted a loss of 45 cents per share on $1.2 billion in revenue a year ago.
Related: Analyst revamps Tesla, Rivian, Nio price targets on electric vehicle demand
For the 1/3 quarter, Nio forecasts revenue between $2.63 billion and $2.seventy one thousand million, with vehicle deliveries estimated between 61,000 and 63,000 units.
Both projections exceed analysts' expectations of roughly $2.5 billion in revenue and Fifty seven,000 vehicle deliveries.
Li said the whole way during the earnings free up that Nio has secured over 40% of the market share in China's battery electric vehicle segment priced above RMB 300,000 ($Forty two,314).
The company would now not sell cars the whole way during the U.S. yet, but Nikkei Asia reported that Nio aims to enter the U.S. market by 2025.
Analysts set mixed Nio stock price targets
Bank of The u.s. raised Nio's price target to $5.three from $5 and kept a neutral rating after seeing largely narrowed non-GAAP net losses, in step with the firm's estimates.
The analyst also warns that while there shall be some positive effects from volume growth in 2024, the advantages shall be limited by slower margin expansion and high operating expenses, in step with Thefly.com.
Mizuho analyst Vijay Rakesh also kept a neutral rating on Nio while lowering the cost target to $5 from $5.5.
The firm notes that Nio has projected Q3 deliveries of Sixty two,000 units and expects margins to toughen with higher volumes. Nevertheless, it also points out that the Onvo launch may present a brief-term challenge because the company scales up its production of lower-cost vehicles.
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Citi lowered Nio's price target to $7 from $8.50 with a buy rating ahead of the earnings. The analyst expects volume growth and reduced promotional incentives to boost gross margins in Q3 and This fall.
Citi thinks Nio's and its Chinese rival XPeng's (XPEV) valuation will converge and open up an arbitrage opportunity for Nio amid favorable sector and policy trends. It increased estimates for Nio but cut the cost target on the shares.
Nio traded at around $5 on September 6.
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