Nio (NYSE:NIO) does not look investable. The company’s appearance on "60 Minutes" pumped the stock price. Last quarter, weak results led to a panic sell. On May 28, when it reported first-quarter results that exceeded expectations, this did little to help the stock.
Nio reported a non-GAAP EPS of $0.36 on revenue of $243 million, both of which beat consensus. It delivered 1,124 ES8 deliveries in April and 5,113 for the first four months of 2019. Delivery of its ES6 model, which is a five-seater high-performance EV SUV, begins this month in June.
Nio has over 12,000 pre-orders for ES6, a volume that failed to impress investors. Growing revenues are offset by even higher costs, so Nio must optimize operations, find efficiencies, control costs and manage cash flows.
NIO Pop-up Houses
Nio promotes its brand and drives direct sales through its 15 Nio Houses in 12 cities across China. It has 17 Nio Pop-up houses in 17 additional sales. But costs are too high, so Nio will shift its focus to smaller Pop-up Houses. This will lower capital requirements and give the company better flexibility on the cost side.
Outlook
Nio forecasts deliveries of between 2,800 to 3,200 vehicles. Revenue will come in between $169 million - $193 million. These figures are down sequentially, so with the stock in a sustained downward trend, the market does not expect Nio reaching profitability this year.
