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Chinese EV startup Nio’s shares slump 16% after reporting dire outlook amid coronavirus outbreak

The company forecasted Q1 revenues between USD 173.7 million and 179 million, below analysts’ estimates of USD 398 million. 

Photo: stock.tuchong.com

Chinese electric vehicle (EV) startup Nio (NYSE: NIO) saw its shares plunge 16.2% to USD 2.43 after its latest financial results in the fourth quarter of 2019 suggest a weak outlook for the company.

The company forecasted first-quarter revenues between RMB 1.21 billion (USD 173.7 million) and RMB 1.27 billion, below analysts’ estimates of USD 398 million.

Nio also expected its vehicle deliveries in the first quarter of 2020 to be between 3,400 and 3,600, a drop of over 50% from the previous quarter, constrained by the limited supply capacity.

“We have been monitoring the supply chain very closely and have seen positive changes every day. We do see the supply chain recovery has speeded up since the middle of March, so we hope that production capacity can return to normal in April,” said Li Bin, founder and CEO of Nio.

Nio made a total revenue of RMB 2.8 billion (USD 409.1 million) in Q4 2019, a decrease of 17.1% from the same quarter of 2018. It reported a narrowing net loss of RMB 2.86 billion (USD 411.5 million), representing an 18.2% year-on-year (YoY) decrease.

The EV maker has delivered 8,224 vehicles in the fourth quarter of 2019, including 6,824 ES6s and 1,400 ES8s, compared with the deliveries of 7,980 in the same quarter in 2018. However, its total vehicle sales reached USD 385.5 million, a decrease of 20.6% from the same period in 2018. Nio attributed the YoY decrease in sales to a higher proportion of ES6 models sold in this quarter, as the selling price of ES6, which starts from RMB 358,000, is lower than that of the ES8 starting from 476,000.

Other sales in this quarter earned USD 23.6 million, up 202.1% YoY, attributed to increased sales of home chargers and car accessories in line with vehicle deliveries.

Nio reported USD 151.7 million in cash balance as of December 2019, which was down from USD 274.3 million at the end of September and not enough for “continuous operation” in the next 12 months, the company said.

Regarding the financing issues, Nio’s CFO Feng Wei said that the company has made several private placements of convertible notes in February and March 2020 in an aggregate amount of USD 435 million, which supported Nio’s daily operations and business development.

Nio has also entered into a collaboration framework agreement in February with the government of Hefei, Anhui, who will be expected to provide resources and funding support for the company to establish NIO China headquarters in the city. “The parties are working on the legally binding definitive documents to be signed,” Feng added.