Chinese EV maker Nio’s shares soar 53% after earnings beat expectations

The company reported a narrowing net loss of USD 352.8 million, representing a 10.3% year-on-year decrease.

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Chinese electric vehicle (EV) startup Nio saw its shares soared 53% on Monday after it announced its third-quarter earnings that beat investors’ expectations of the company’s revenue and loss.

According to the company’s earning announcement, Nio made a total revenue of RMB 1.8 billion (USD 257 million) in Q3 2019, up 25% from the same quarter of 2018 and 21.8% from the second quarter of 2019, beating analysts estimates of RMB 1.6 billion. It also reported a narrowing net loss of RMB 2.5 billion (USD 352.8 million), representing a 10.3% year-on-year decrease.

US-listed Nio’s stocks soared 53% to USD 3.72 on Monday in the wake of this announcement, which is the biggest single-day gain after its listing in September 2018. Its market capitalization has reached USD 3.9 billion after the shares upsurge.

The EV maker has delivered 4,799 vehicles in the third quarter of 2019, increasing more than 1,000 compared with the second quarter’s 3,553 deliveries. Its total vehicle sales reached USD 242.5 million, an increase of 21.5% from the same period in 2018. Sales of smart electric SUV model ES6, which started delivery in June, mainly contributed to the surge. Other sales in this quarter were USD 14.5 million, up 142.1% year-on-year, which was attributed to the increasing sales of charging piles and car accessories in line with the vehicle deliveries.

Li Bin, Nio’s founder and CEO, expected the Shanghai-based automotive startup to deliver over 8,000 vehicles in the fourth quarter of 2019. The company has already delivered a total of 17,395 EVs this year as of November 30.

When asked about the company’s fundraising issues, Nio’s CTO Feng Wei said on the conference call that the USD 200 million raised in September from its CEO, Li Bin and major shareholder Tencent via convertible bonds was almost complete, while Tencent’s portion was already shown in the financial results for Q3 2019.

Nio’s better-than-expected financial results in Q3 2019 reflect that the company has taken a series of actions to curb spendings. It has shifted in September from building Nio Houses, which are large showrooms with lounges for users, to adding Nio Spaces, which will be smaller in area and cost less.

The company has also cut its employee numbers throughout 2019. Li said on the earnings conference call that the company will slash its employees to less than 7,500 from 9,900 at the beginning of this year.

When it comes to expenses, Nio spent USD 143.2 million on research and development, which was relatively the same compared with the same period in 2018. Its selling general and administrative expenses in this quarter had a 30.3% year-on-year decrease and reached USD 162.9 million, mainly due to the company’s measures to save costs in marketing and other supporting functions.

Nio launched its third production model EC6 on December 28, along with the all-new flagship ES8 and its 100kWh battery pack at the company’s annual event Nio Day 2019, to boost sales and compete against Model Y, the latest model manufactured by US premium EV maker Tesla, which will be launched globally in 2020.