On Friday, BofA Securities updated its outlook on shares of electric vehicle maker NIO Inc. (NYSE:NIO), increasing the price target to $6.00 from the previous $5.90, while maintaining a Neutral rating on the stock. The adjustment followed the company's announcement of its first-quarter 2024 financial results on Thursday, June 6.
NIO reported a total revenue of RMB 9.9 billion for the first quarter, marking a 9% year-over-year decrease and a 42% drop compared to the previous quarter. The year-over-year decline was attributed to a lower average selling price as the company worked to clear out its inventory of 2023 model vehicles.
Despite the revenue dip, NIO's overall gross profit margin (GPM) improved to 4.9%, which was higher than the anticipated 3.2%. The vehicle and other revenue GPM stood at 9.2% and -18.4%, respectively, surpassing forecasts of 9.0% and -25%.
Operating expenses as a percentage of sales reached 59.4%, showing a significant increase of 10.0 percentage points year-over-year and a 13.1 percentage point rise quarter-over-quarter. The company's operational loss for the quarter was RMB 5.4 billion, aligning with projections. Additionally, NIO's non-GAAP net loss for the first quarter was RMB 4.9 billion, an 18% increase from the same period last year but a 1% decrease from the last quarter, closely matching the estimated RMB 4.8 billion.
The financial performance of NIO in the first quarter of 2024 reflects the company's strategic pricing adjustments and the impact of inventory management on its revenue and margins. Despite the challenges, the slight increase in the price target suggests a cautiously optimistic view of the company's financial health and market position.
In other recent news, NIO Incorporated has reported a 7.2% year-over-year decrease in its first-quarter earnings for 2024, with revenues totaling RMB 9.9 billion. During this quarter, the company delivered 30,053 premium smart EVs and forecasts Q2 deliveries to range between 54,000 and 56,000 units.
NIO has also announced the launch of a new brand, ONVO, which is geared towards the mainstream family market, with preorders for its first product, the L60 smart electric mid-sized SUV, already in progress.
The company's gross margin was reported at 4.9%, with a vehicle margin of 9.2%. In addition, NIO Power, a subsidiary of the company, secured a strategic investment of RMB 1.5 billion and currently provides over 45 million power swaps globally through its network of 2,472 power swap stations. NIO executives anticipate vehicle margins to improve to double digits in the upcoming quarters.
These are recent developments that highlight the company's strategic expansion into different market segments and its continued investment in NIO Power. Despite the challenges faced in Q1 2024, the company's outlook remains optimistic with the anticipation of improved vehicle margins and steady increases in vehicle volume.
InvestingPro Insights
As NIO Inc. (NYSE:NIO) navigates the dynamic landscape of the electric vehicle industry, real-time data from InvestingPro offers a deeper dive into the company's financial health and market performance. With a market cap of $10.16 billion, the company holds a significant presence in the sector. Notably, NIO's latest metrics indicate a Gross Profit Margin of 6.16% over the last twelve months as of Q1 2024, which, while modest, shows an improvement over the reported Q1 GPM of 4.9%. This could signal a trend towards greater efficiency or successful pricing strategies.
InvestingPro Tips highlight that NIO has more cash than debt on its balance sheet, providing a degree of financial flexibility in a competitive market. Additionally, 2 analysts have revised their earnings upwards for the upcoming period, suggesting a potential shift in market sentiment. However, challenges remain, as NIO is quickly burning through cash and analysts do not anticipate the company will be profitable this year. Moreover, the stock has experienced a significant decline over the last six months, with a 34.45% drop in price total return. For those interested in a comprehensive analysis, InvestingPro offers additional tips that could guide investment decisions. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and gain access to the complete set of 11 InvestingPro Tips for NIO.
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