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Here's What Investors Should Note Ahead of NIO's Q2 Earnings

Zacks Equity Research
·3-min read

NIO Inc. NIO is slated to release second-quarter 2020 results on Aug 11, before the opening bell. The Zacks Consensus Estimate for fiscal second-quarter loss per ADS of 34 cents has remained stable for the past 60 days. The year-ago loss was 45 cents per ADS. The Zacks Consensus Estimate for revenues is pegged at $486 million, suggesting an uptick from $220 million reported in the prior-year quarter.

Factors at Play

Increasing demand for NIO’s ES6 and ES8 models is likely to reflect on the firm’s second-quarter 2020 results. NIO delivered 10,331 vehicles in the quarter to be reported. The figure exceeded the firm’s guidance and increased 191% from the year-ago level.

NIO’s battery swap technology is a game changer and is likely to aid the company’s results for the quarter to be reported. The technology that is part of NIO’s BAAS (Battery-as-a-Service) strategy has been helping to save time when charging an EV and alleviating range anxieties. As of May 26, 2020, NIO Power completed more than 500,000 battery swaps, becoming one of NIO’s most well-received power services.

During the quarter, the company secured around $1 billion in new financing from China’s economic development authorities, which shored up its cash balance. In June, China-based internet behemoth Tencent Holdings increased stake in NIO to 15.1%. Cash infusion from investors and increasing efforts to expand the company’s sales network started to yield benefits. These factors are instilling confidence on the stock and are likely to reflect positively on its second-quarter results.

However, the company has been bearing the brunt of operational inefficiency over the last several quarters. While rising deliveries are expected to have positively impacted NIO’s revenues, escalating R&D as well as SG&A costs are likely to have dented operating margins. 

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for NIO. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Tesla has an Earnings ESP of 0.00%.

Zacks Rank: It carries a Zacks Rank of 3 currently.

While our model does not indicate an earnings beat for the electric vehicle startup NIO, some of the auto companies that delivered better-than-expected results for second-quarter 2020 include Tesla TSLA, O’Reilly ORLY and Group 1 Automotive GPI.  

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